Monday, 24 March 2014
FAIRER TREATMENT FOR THE VULNERABLE
Our national law provision for victims of hit and run drivers
The MIB’s main function is to fulfil the United Kingdom’s obligation under European Community law to appoint a compensatory body to deal with these claims. It will be readily appreciated that court proceedings are not possible in the absence of an identifiable defendant to serve. However there are concerns that children and mentally handicapped accident victims do not receive fair treatment under the present regime.
The MIB is a private company set up and managed exclusively by senior executives appointed from every major insurer that underwrites motor insurance in the UK. There is no independent representation on the MIB Board by other stakeholders or special interest groups. Although it is a non-profit making organisation, its personnel are often recruited from the insurance sector and it is itself an important part of that multi-billion pound industry.
The Department for Transport admits that it does not monitor or otherwise influence the way in which the MIB investigate and deal with claims under the 2003 Agreement. This arrangement confers a wide autonomy in the way in which these claims are investigated and settled; it is one that lacks transparency and accountability.
Proper Safeguards for the vulnerable
In a normal court action against an identified and insured driver, the Civil Procedure Rules provide a triple set of safeguards whenever a claimant is a child or mentally incapacitated:
· Firstly, Rule 21.2 insists on the appointment of a litigation friend in proceedings and where there is no one suitable, the Official Solicitor assumes that role.
· Secondly, Practice Direction 21.5 insists on a claimant submitting a legal opinion on the whether a proposed settlement is fair, in all but the simplest of cases, so it can arrive at an informed decision.
· Thirdly, Rule 21.10 states that any settlement or compromise (whether before or after proceedings are issued) is only valid if it has been approved by the Court.
The vulnerability of protected parties to any lesser regime is perfectly illustrated in a very recent Supreme Court case. In Dunhill v Bergin the Court set aside a consent order that had been agreed on behalf of a protected party in the presence of a trainee solicitor and a barrister who were representing her. No one appreciated that she was mentally incapacitated and so, her lawyers did not appoint a litigation friend or make a formal application for the £12,500 settlement to be approved by a judge under Rule 21. To make matters worse, they seriously underestimated the true impact of the victims’ injuries. Subsequently, it became apparent that her claim was worth up to £2,000,000.
The Supreme Court ruled that the consent order should be set aside, even though the claimant had legal representation and notwithstanding that no one realised that she was mentally handicapped at the time, because the agreement’s validity depended upon the parties obtaining court approval. Lady Justice Hale, who delivered the Supreme Court’s unanimous ruling in Dunhill, said:
‘...the Civil Procedure Rules is clear: that children and protected parties require and deserve protection, not only from themselves but also from their legal advisers.’
In the context of an untraced driver claim under the 2003 Agreement, she might well have added that they also deserve protection from a third source: from the commercial interests of the motor insurance companies that control the MIB.
In 2010 Sir Rupert Jackson’s extensive evidence based investigation into personal injury litigation costs revealed a widespread concern that insurers were consistently attempting to settle claims at levels that were significantly less than the victims’ true compensatory entitlement.
Gaps in protection
Because the basic safeguards provided by the CPR do not extend to the 2003 Agreement, a child or mentally handicapped individual is exposed to being confronted by the MIB with an offer to settle that is effectively a fait accompli, with insufficient means of telling whether it is a fair proposal or not. Some claims involve complex issues that involve a question of judgment on liability, causation and quantum – sometimes involving a number of different experts, all chosen and instructed by the MIB.
The six week period for appealing an MIB’s decision or offer to settle does not provide nearly enough time, in a complicated claim, to secure expert second opinions and legal advice; assuming that the applicant realises the need.
There are growing concerns that the lack of supervision, transparency and accountability as to the way the MIB operates, compounded by the absence of suitable legal safeguards, as outlined above, poses a real and significant risk that children and the mentally handicapped are exposed to unfair compromises and settlements at undervalue.
These issues and the legal intricacies they involve are considered in more detail in an article that the New Law Journal has recently published: An Untidy Arrangement? You can access this online using this link.
Flawed ministerial review
In February 2013 the Right Honourable Stephen Hammond MP published the Department for Transport’s review of its arrangements with the MIB for victims of uninsured and untraced drivers. One of his proposals for victims of untraced drivers was that children and protected parties (i.e. the mentally incapacitated) should have their settlements approved by an independent arbitrator but only where they are not legally represented, see Question 5 of the Consultation Paper.
What the Dunhill case illustrates, so vividly, is the importance of the triple safeguards conferred under the Civil Procedure Rules. These do not apply to untraced driver claims as they are not court proceedings.
To deny an independent appraisal as to the adequacy of a compromise or the sufficiency of a settlement where lawyers are involved, as the Minister proposes, is to risk a similar disaster to that which nearly happened in Dunhill. This is especially true under 2003 Agreement where the fixed scale of legal fees is only sufficient to fund legal representation in the simplest of cases. Meanwhile, under the current unrevised scheme, claims are still being settled (i) without any legal representation and (ii) without any opportunity for an independent assessment by a suitably qualified arbitrator, except on appeal.
Similarly, to restrict the arbitrator’s independent assessment to cases where there has been no independent legal representation means that the arbitrator’s decision will almost inevitably be subject to a degree of bias. This is because the arbitrator’s decisions will be based on the one sided evidence of the MIB carefully chosen experts as well as its own representations. The danger here is that this presents no adequate opportunity to test or challenge the veracity of that evidence through forensic examination.
The Minister’s proposal also ignores a ‘Catch 22’ conundrum presented by an unrepresented child or mentally handicapped individual: how can someone, whom the law deems incapable of the level of understanding necessary to equip them to conduct their own case, possibly be expected to know when to challenge the MIB’s appointed expert’s opinions or its views on apportionment of liability or even the value the MIB has put on the claim, still less how to go about articulating their case or appealing a decision?
The Minister has been informed of these shortcomings. Unfortunately, so far, he has declined to indicate whether he is willing to improve the compensatory safeguards for children and the mentally handicapped under the 2003 Agreement. It is over a year since he announced his review and still we have had no indication of the Minister’s intentions or when he plans to implement them.
Call for action
If you agree that injured children and mentally handicapped victims of untraced drivers deserve better protection under the 2003 Agreement then I would be very grateful it you would contact me to discuss how best to increase press and public awareness on this issue to persuade the Minister of the need for urgent reform.
Solicitor, Legal Services Consultant, Mediator, Legal Trainer
Office 01823 325365
Mobile 07968 427134
33 Queen Street, Taunton, Somerset, TA1 3AX