qbe issues forum - liability_round-up - january 2013

7/28/2019 QBE Issues Forum - Liability_Round-Up - January 2013

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Liability RoundUp of 2012


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Liability Round Up o 2012 - January 2013

Contents

Liability Round Up of 2012

2012 Highs and Lows 1

Jackson Reforms 2

The Portal 3

Fraud 4

Vicarious Liability 5

Schools 6

Occupiers 7

Scottish Jury Awards 8

Looking Forward 9

Disclaimer 9


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It was the second wettest year since UK

records began and the economy remained

sluggish but events like the London Olympics

and the Queens Diamond Jubilee provided

some relie rom the gloom and contributed

to patchy economic growth in 2012.

Reducing the burden o litigation and

regulation on business has been much

on the Governments mind and claims,

especially small claims, have been much in

the news. Progress on reorming litigation

unding in England and Wales was mied.

The Jackson reorms are largely on

course or April 2013 but the timing o the

etension o the Ministry o Justices claims

portal to encompass motor injury claims up

to 25,000 in value and or the rst time to

include liability injury claims (rom 1,000

to 25,000 in value) is now in doubt.

The Enterprise and Regulatory Reform Bill

will not just remove strict civil liability or

breach o health and saety regulation by

employers, as recommended in Proessor

Lostedts 2011 report but will remove all

civil liability or a breach. This should lead to

ewer claims. By the end o 2012, this Bill

had made it as ar as the House o Lords.

In the Courts, 2012 saw some encouraging

decisions on raud, the liability o local

authorities or children and on occupiers

liabilities. There were some less welcome

developments on vicarious liability.

1 Liability Round Up o 2012 - January 2013

2012 Highsand Lows


4/12

The Legal Aid Sentencing and Punishment

of Offenders (LASPO) Act gained royal

assent on 1 May 2012. With the eception

o Mesothelioma claims, LAPSO will end

the recoverability o Ater the Event (ATE)

insurance premiums and Conditional

Fee Agreement (CFA) success ees rom

deendants in England and Wales. CFAs

and ATEs were cited by Lord Justice

Jackson as being the primary causes oa disproportionally heavy costs burden on

deendants, which was distorting the whole

litigation process in England and Wales.

The end o ATE and CFA recoverability will

certainly assist deendants but these are

just two aspects o an interlocking package

o measures. In order to compensate

injured claimants or having to pay up to

25% o their damages to their solicitors

or success ees, the Court o Appeal

has introduced a 10% uplit in GeneralDamages or cases heard ater 1 April 2013

(ecluding those cases where ATEs were

signed prior to then).

LASPO also introduces a ban on reerral

ee payments by solicitors or new cases,

which have been blamed or encouraging

claims. The MOJ see the ban as leading

to a reduction in claims numbers but

many commentators have questioned

how eective this will be given the many

potential ways o circumventing the Act.

To saeguard access to justice and remove

the need or ATE insurance protection,

the Civil Procedure Rules Committee is

introducing Qualied One Way Costs

Shiting (QOCS) rom 1 April. This will

mean that barring the consequences o

Part 36 oers, a claimant who brings an

honest, properly ounded claim will not have

to pay the deendants costs i the claimant

loses whereas a losing deendant will haveto pay the claimants costs.

Where a claimant is obliged to pay costs,

having ailed to beat a deendants Part 36

oer, their liability or costs will be limited

to the amount o their damages unless they

are shown to have been dishonest.

The Jackson reorms are intended to reduce

the burden o litigation on deendants without

penalising claimants. Lord Justice Jackson

is reported as saying that he believes thatclaimants will actually be slightly better o

and that claimants solicitors are epected

to be the losers nancially.

JacksonReforms



5/12

The etension o the Ministry o Justices

(MOJ) claims portal scheme was planned

or April 2013 but at the time o writing,

the Justice Secretary is reconsidering the

timing o the etension. The Association o

Personal Injury Lawyers (APIL) have been in

discussion with the MOJ ater seeking a

judicial review o the etension which they

say is being implemented without proper

consultation having taken place. Delaysin nalising the rules or the scheme and

in constructing the new electronic portal,

which will handle liability claims, have

strengthened the position o those arguing

that the changes are being brought in too

quickly. No new implementation date has

yet been announced but the 1 April 2013

date has been abandoned.

In addition to the etension o the portal

scheme rom covering just motor injury

claims o 1,000 to 10,000 in valueto motor and liability injury claims up to

25,000 in value, the MOJ plan to

introduce a predictive costs regime

to run alongside it.

The portal costs and rules are not yet

ed but the costs gures proposed in

the recent MOJ consultation or both the

portal and the predictive costs scheme

promise signicant savings. The downside

or deendants is that to keep claims within

the scheme they must acknowledge claims

and concede liability in ull within very short

time scales. The current proposals are or

acknowledgement o a new claims the net

working day and admission o liability within

30 working days or Employers liability

claims and 40 or Public Liability.

This will obviously reduce time or

investigation and could increase raud.

The Portal



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There were some encouraging judgments

rom the courts in England and Wales on

raud in 2012.

In Tariq v Alithe Court o Appeal ruled that

the High Court had jurisdiction to commit

raudsters to prison. Prior to this decision,

deendants wishing to have raudsters

committed were obliged to reer the case

to the Divisional Court, an epensive and

lengthy process. The Court o Appeals

ruling means that contempt committals

can be brought ar more cheaply and

quickly and greatly increases the chances

o the same judge who has heard the

claimants raudulent evidence, hearing

the committal proceedings.

The case oSummers v Fairclough Homes

Ltdconcerned a ormer employee o

the deendants who had been genuinely

injured at work. Mr Summers however had

greatly eaggerated his claim saying that

he could not work again and seeking nearly

800,000 in damages. He was lmed

working and this evidence enabled the

deendants to reduce the claim to 88,000.

The deendants applied to have the case

struck out in its entirety or abuse o process

but the judge at rst instance and later the

Court o Appeal held that the court did not

have the power to strike out genuine claims

even when associated with dishonesty.

The deendants appealed to the UK

Supreme Court who held that the courts

could strike out a grossly eaggerated claim

or abuse o process at any stage even, in

eceptional circumstances, post trial. They

declined to strike out Mr Summers claim

however perhaps taking into account that

ater costs penalties he would receive no

damages anyway.

It did not take long or another case to

come beore the courts to test how judges

would interpret the Summers ruling. In Fari

v Homes for Haringeythe claimant had

suered an injury, which based on medical

and surveillance evidence the judge held

was worth only about 1,500 whereas

the claimant sought 740,000 or alleged

lie-long disability. The judge in the Central

London County Court struck the claim out

in its entirety and transerred the case to

the High Court or contempt proceedings.

Mr John Machin had the dubious privilege

o becoming the rst person to be

successully prosecuted by the Insurance

Fraud Enorcement Department, the

specialist police unit unded by insurers

to tackle insurance raud.

Mr Machin rang his motor insurers to

report a raudulent motor claim but orgot

to hang up aterwards and was taped by

his insurers boasting to a riend about how

much money the raud would get them. Hewas tried at Leeds Crown Court and given

a one year suspended sentence. He also

suered the embarrassment o having the

telephone call to his insurers broadcast

on Radio 4 and o the story being widely

reported, even internationally.

Fraud



7/12

The time was when an employer would not

be held vicariously liable or the criminal

acts o an employee but this is no longer

the case. The House o Lords decision

in Lister v Hesley Hallback in 2001 was

the rst o many subsequent child abuse

cases where employers were held to

be vicariously liable or their employees

misdeeds. The scope o vicarious liability

continued to epand in 2012.

In the conjoined cases oWaddell v

Barchester Healthcare Ltdand Wallbank

v Wallbank Fox Designs Ltdthe Court o

Appeal had to consider whether employers

were liable or assaults on managers

by employees.

In the rst case, a drunken employee cycled

into work and assaulted his manager ater

being telephoned at home on his day o

and asked to work an additional shit. Inthe second case a young employee lost

his temper and assaulted the claimant in

the work place ater taking oence at being

asked to work aster.

The legal test is one o the closeness o the

connection o the employees duties and

his wrongdoings. In the Waddellcase the

Court o Appeal held that the connection

was not close enough. There was too long

a gap between the request to work longer

hours and the assault and the location

o the assault at the work place was tosome etent coincidental. The employee

was likely to have assaulted the claimant

wherever he had seen him.

In the Wallbankcase the employee had

reacted immediately i unreasonably to an

instruction rom his employer and there was

sucient closeness o the assault to the

employees duties or liability to attach to

the employer.

InJGE v The Trustees of the Portsmouth

Roman Catholic Diocesan Trustthe Court

o Appeal had to decide as a preliminary

issue whether the local diocese was

vicariously liable or alleged seual abuse

committed by a priest. A priest is not an

employee o the diocese but the Court

o Appeal held that the relationship was

akin to employment and suciently

close or vicariously liability to attach.The decision has serious implications or

all unincorporated associations where

individuals have roles akin to employment.

Another troubling case in this area o

law is that oVaickuvienne and Others v

J.Sainsbury. The amily o a man murdered

at work by a racist colleague, brought a

claim or damages against Sainsbury who

employed both men.

Mr Romasov was subjected to racial

harassment by Mr McCulloch who worked

with him at a Sainsburys store. Mr

Romasov complained to his employers

about McCullochs conduct but they took

no immediate action.

Two days later McCulloch tried to persuade

Romasov to withdraw the complaint. When

Romasov reused, an argument broke

out culminating in McCulloch stabbing

Romasov to death with a kitchen knie

taken rom one o the shops shelves.

McCulloch was subsequently convicted

o murder and given a lie sentence.

J.Sainsbury tried to have the claim struckout on the basis that it was impossible

or the claimants to establish a close

connection between the murder and

McCullochs duties. The judge disagreed

and permitted the case to proceed.

The case is being brought in the Scottish

jurisdiction and at the time o writing, has

not yet been resolved but the judge did

reer to previous judgments in England

and Wales where the courts held that

there were good public policy reasons or

etending the scope o vicarious liability

to cover harassment cases. I the Scottish

Court o Session does eventually nd the

employer vicariously liable, the judgment

will be persuasive in other UK jurisdictions.

VicariousLiability



8/12

Perhaps one o the most important cases

o 2012 or schools and indeed or anyone

dealing with children and other vulnerable

people was that oWoodland v Essex

County Council.

The claimant was a pupil o a school run by

Esse County Council. During a swimming

lesson organised by her school she came

close to drowning and was let with severebrain damage.

The accident occurred in a swimming pool

run by another local authority, the lesson

itsel was supervised by a teacher and

a lieguard both employed by a private

company. The claimants legal team argued

that the council werein loco-parentis or the

claimant and as such had a non-delegable

duty to ensure that reasonable care was

taken to ensure her saety.

The council succeeded in striking out the

claim at rst instance on the basis that it

could not succeed. The claimant appealed

to the Court o Appeal but they too

supported the strike out.

The Court held that it was inappropriate

to etend the local authoritys duty o care

to include activities outside o the school

premises, which were also outside o the

control o the school or its teachers.

To etend the law, as the claimant argued

would discourage education authorities

rom providing valuable educational

eperiences such as eternal swimming

lessons. The decision maintains the status

quo. Local authorities and other bodies

entrusted with the saety o vulnerable

individuals can discharge their duty o care

by ensuring that suitable and competent

service providers are used.

Schools



9/12

In Stannard t/as Wyvern Tyres v Gore a re

spread rom burning tyres on land used by

a tyre tter to the claimants neighbouring

premises which were burnt to the ground.

The judge at rst instance ound that the

deendant had not been negligent. The re

had started accidentally through no ault

o his but he was strictly liable under the

rule in Ryalnds v Fletcher. The deendant

should have realised that several thousand

tyres once alight would burn ercely

and be dicult to etinguish, posing an

eceptionally high risk to neighbours. The

storage o so many tyres was an unnatural

use o the land.

The Court o Appeal held that the rule

in Rylands did not apply. The thing

brought on to the land were tyres and

these were not o themselves dangerous

or mischievous. There was no evidence

that Stannard should have been aware

o an eceptionally high risk i the tyres

escaped. In any event, the tyres did not

escape, the re did! For a tyre tter to

store tyres on his land could not be said

to be an etraordinary or unusual use.

The decision brings useul clarity to the

principle in Rylands and arguably reduces

its scope; at least as ar as re claims

are concerned.

Occupiers



10/12

The very large and unpredictable awards

made by Scottish juries have long been

a cause o concern or deenders in the

Scottish jurisdiction. Jury awards have

pushed up damages especially in atal

accident cases, with awards or loss

o society in some cases eceeding

100,000 per bereaved relative (compared

to a statutory bereavement award in

England and Wales capped at 11,800

split amongst qualiying individuals).

Historically, neither counsel nor judge

was allowed to make reerence to any past

awards made by judges or juries meaning

that the only inormation the jury was given

was the amount sued or (i.e. what the

pursuer wanted) and the heads o damages

(contained in a document called the Issue

lodged by the pursuer with the court).

In the conjoined appeals oHamilton and

Anr v Ferguson Transport (Spean Bridge)

Ltdand Thomson v Dennis Thomson Ltd

the Inner House o the Court o Session not

only granted a re-trial o the jury awards o

damages in two atal accident cases but

also approved a new process suggested

by the deenders in the case.

In uture judges will hear the views o the

opposing counsel on the value o the claim

(based on case law) and then give the

juries a range o values. The juries will be

ree to disregard this advice but i they do,

it should be easier or a deender to argue

that the award was ecessive and obtain

a retrial.

ScottishJury Awards



11/12

Lord Justice Jacksons package o reorms

and the etension o the MOJs claims

portal scheme promise some savings or

deendants in 2013 but the reorms are

not all to deendants benet. The 10%

increases in General Damages awards

will add to rising claims infation as will the

ever-rising costs o medical aids, treatment

and care regimes. The campaign by the

Association o Personal Injury Lawyers andothers to reduce the discount rate has not

gone away and any reduction in the rate

would have a signicant infationary eect

on settlements.

There are reasons or cautious optimism in

2013. Making the most o potential savings

rom costs and other reorms however will

require maimum eort rom businesses

and their insurers and there is the risk

that these could be largely oset by

other actors.

Completed 14 January 2013 written

by and copy judgments and/or source

material for the above available from

John Tutton (contact no: 01245 272756,

e-mail [email protected]).

Disclaimer

This publication has been produced by

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Readership o this publication does not

create an insurer-client, or other business

or legal relationship.

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This publication does not purport to provide

a denitive statement o the law and is not

intended to replace, nor may it be relied

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LookingForward



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qbe issues forum - liability_round-up - january 2013

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