Asbestos victims successfully challenge change in conditional fee/ATE costs rules
8 October 2014
Whitston (Asbestos Victims Support Victims Support Groups Forum UK) v Secretary of State for Justice and the Association of British Insurers (Interested Party)  EWHC 3044 – read judgment
In April 2013 the rules permitting recovery of success fees under Conditional Fee Agreements (CFAs) and After The Event (ATE) insurance premiums changed in response to the Jackson proposals – with one exception, namely in respect of mesothelioma claims.
This case concerns the Lord Chancellor’s intention to bring costs rules in mesothelioma claims in line with other claims.
As many of you will know, mesothelioma is an industrial disease caused by the inhalation of asbestos. It is a rare form of cancer which generally does not become apparent until many years after exposure to asbestos, a feature which at least in the past has led to real problems when mounting a claim against those responsible for the exposure. Once the cancer does become symptomatic its progression is rapid. Most sufferers survive for less than 12 months from the onset of symptoms. Yet the effects of the disease over the period from the onset of symptoms to death are hugely painful and debilitating. This combination of factors means that litigation in relation to mesothelioma is unusual in comparison with many other types of litigation involving personal injury or industrial disease. In almost every case in which a claim is made for damages for mesothelioma the effective defendant is an insurance company.
The claimant was the chairman of the Asbestos Victims Support Groups Forum which represents ten different asbestos victims support groups throughout the United Kingdom. The Forum acts as a representative body for those afflicted with asbestos related diseases in respect of legal and political issues arising from such diseases. They challenged the decision of the Lord Chancellor to change the rules so that mesothelioma claimants were no longer excluded from the legislation prohibiting recovery of success fees and ATE premiums as well as the base costs carried out under a CFA. Section 48 of the Legal Aid Sentencing and Punishment of Offenders Act 2012 (“LASPO”) sets out in clear terms that the Lord Chancellor should carry out a review of the likely effect of removing the recoverability of success fees and ATE premiums in claims for damages for diffuse mesothelioma.
When the Lord Chancellor did so, in December 2013, he decided that mesothelioma claimants could no longer recover success fees and ATE premiums from insurance defendants. The review was announced by way of a written ministerial statement on the 4th December 2013, identifying the consultation leading up to the review and stating that 100 responses had been elicited. He said:
The Government does not believe that the case has been made for mesothelioma cases to be treated differently, in particular by comparison to other personal injuries, which can also have profound consequences for the sufferer.
The claimant submitted that there had been inadequate consultation leading up to this decision, defeating the legitimate procedural expectations of mesothelioma claimants following the successful outcome of their claims. He also argued that the decision of the Lord Chancellor in this case was Tameside irrational because he failed to acquaint himself with the relevant material and to ask himself the right question (Secretary of State for Education and Science v Tameside M.B.C.  A.C. 1014).
Davis J considered that he did not need to resolve the Tameside dispute in determining the issue before him:
The question I have to answer is simple: did the Lord Chancellor carry out a proper review of the likely effects of the LASPO reforms on mesothelioma claims as Section 48 required him to do?
Having considered in detail the form of the consultation, the judge concluded that a proper review had not been carried out. No reasonable Lord Chancellor faced with the duty imposed on him by Section 48 of the Act would have considered that the exercise in fact carried out fulfilled that duty.
I do not find that a consultation exercise per se was an inappropriate means of fulfilling the duty. Rather, the nature of this consultation meant that it did not permit the Lord Chancellor to do so.
The fact was that the Lord Chancellor, by reason of the course he adopted, did not review the likely effects of the LASPO on mesothelioma cases in any meaningful sense. This was not a case in which the procedural failing was minor or technical in nature. Whilst it was clear that the Government had a clear view about the merits of applying the LASPO reforms to mesothelioma cases, there had not been a proper review as required by Section 48.
The judge indicated that he would hear argument from the parties as to the appropriate relief, but in view of his conclusion on the issue of whether there had been a proper review, his preliminary view was that he should simply make a declaration that the Lord Chancellor had failed to carry out a review as required by Section 48. The statutory consequence of such a declaration must be that Sections 44 and 46 could not be brought into force in relation to proceedings relating to a claim for damages in respect of diffuse mesothelioma. It was now for the Lord Chancellor to carry out a proper review of the likely effects of the LASPO reforms in whatever manner he concluded would permit him reasonably to achieve the required purpose.
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