Technical claims brief

Monthly update March 2012

Contents
News 1
Jackson reforms postponed Former Autofocus staff face application for committal for contempt of court Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR) relaxation comes into effect Government issues response on civil justice consultation 1

Costs

Early Part 36 offer effective: SG (A Child...) v HK Hewett High Court (2011) 5 Interest on costs must run from date of costs order Simcoe v Jacuzzi UK Group Ltd Court of Appeal (2012) Road Traffic Accident widely defined - Griffin v Wisbech Phab Club Supreme Court Costs Office (2011)

Liability
Passenger injured in course of crime unable to claim: Delaney v Pickett and Tradewise Insurance - Court of Appeal (2011) Vicarious Liability for Assault at Work: Richard Waddell v Barchester Healthcare Ltd and Wallbank v Wallbank Fox Designs Ltd - Court of Appeal (2012)

Quantum
92 year old Mesothelioma victim receives significant General Damages Award: Dennis Ball v Secretary for Energy and Climate Change High Court (2012)

Disclaimer 10

News Jackson reforms postponed

A Government Minister has announced in the House of Lords that the implementation of the Jackson reforms, scheduled for October 2012, is to be put back until April 2013. Lord Wallace a Liberal Democrat peer and Advocate General for Scotland, explained that the Government wished to allow enough time to get the complex details right and for legal businesses to prepare for the changes. The Government however, was said to be still firmly committed to the reforms. It has rejected all amendments to the Legal Aid Sentencing and Punishing of Offenders (LASPO) Bill despite strong pressure from peers, especially on clauses 43 and 45 dealing with Success Fees and After the Event (ATE) insurance premium recoverability. Lord Wallace said that the

reforms once in force (in England and Wales) would save the NHS Litigation Authority (NHSLA) 50 million a year. Several peers raised concerns that Qualified One Way Costs Shifting (QOCS) was to be introduced by the Civil Procedure Rules Committee without any statutory instrument that could be debated by Parliament. QOCS would protect claimants from having to pay a successful defendants costs unless their behaviour was unreasonable or they failed to beat a costs protective settlement offer. Lord Wallace recognised that the rules would be difficult to frame and that there was a risk of satellite litigation but assured the House that the Government would continue to consult widely with stakeholders once the details of the LASPO Bill were finalised. He also confirmed that the 10% uplift in general damages (another part of the Jackson reforms intended to compensate claimants for the loss of ATE and Success

Fee recoverability) would apply to the Statutory Bereavement Award. Comment: Delay in implementation of reforms will mean a delay in costs savings for compensators. The avoidance of satellite litigation is however an understandable goal. Currently all amendments to the Bill are withdrawn but these can be reintroduced and a vote called for later in the process. Peers remain concerned that vulnerable claimants such as mesothelioma victims and the parents of brain-injured children could lose up to 25% of their damages in costs once the reforms are in place. The reforms are likely to face further challenge and possible delay.

1 Technical claims brief, monthly update March 2012

Former Autofocus staff face application for committal for contempt of court
The long running dispute over the authenticity of evidence provided by Autofocus on Basic Hire Rates (BHRs) to the courts on behalf of the insurance industry appears to be coming to a head. The credit hire company Accident Exchange Ltd (AEL) has been alleging for almost three years that tainted reports supplied by Autofocus in Road Traffic Accident cases in England and Wales have deprived them of recoveries of between 20 million and 50 million from defendants. The reports allegedly gave unrealistically low rates. In December of 2011, AEL persuaded the Court of Appeal that there was sufficient evidence of malpractice for an appeal to be allowed out of time on four test cases. Seven more test cases went before the Court of Appeal on 16 February. The most recent development at the time of writing was the obtaining of permission by AEL for an application to have seven former Autofocus staff committed for contempt of court. The Divisional Court, which granted permission for the application, ordered that evidence of widespread perjury presented to the court by AEL should be referred to the Attorney General. The response from insurers has been mixed. Two insurers are reported to have settled some 900 AEL cases out of court and at least two others are reviewing old cases. Other insurers maintain that notwithstanding any defects with Autofocus evidence their settlements were on the whole, fair and reasonable.

Comment: It seems almost inevitable that further credit hire claims will be re-opened. The number of claims affected is uncertain but estimates of over 18,000 have been reported. The battle between motor insurers and credit hirers continues.

2 Technical claims brief, monthly update March 2012

Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR) relaxation comes into effect
With effect from 6 April 2012, the current reporting trigger for people injured at work of more than three days incapacity will be increased to more than seven. Employers will still need to keep a record of any workplace accident where an employee is incapacitated for more than three days but need no longer report these accidents.

Employers will now have fifteen days in which to report the accident to the relevant enforcing authority (Health and Safety Executive, local authority, Office of Rail Regulation) as opposed to the previous ten days. A Health and Safety Executive guide to the amended regulations can be viewed at www.hse.gov.uk/pubns/indg453.pdf

Comment: The changes bring the regulations into line with the obligation of an employee to obtain a Fit Note from their GP for absences of over seven days (see April 2010 Brief) and follows one of the recommendations for reduced bureaucracy contained in Lord Youngs report Common Sense Common Safety (see November 2010 Brief).

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Government issues response on civil justice consultation

The Ministry of Justice (MOJ) consultation on reforming civil justice in England and Wales Solving Disputes in the County Courts closed at the end of June last year. The consultation covered a number of important areas for potential reform including aspects of Lord Justice Jacksons reforms of litigation funding. The long awaited Government response was finally issued on 9 February this year. Key features are: Extension of the upper limit of the MOJ scheme for dealing with low value

Road Traffic Accident injury claims from 10,000 to 25,000 subject to further evaluation of the existing scheme Extension of the MOJ scheme to cover low value Employers and Public Liability injury claims subject to further consultation Extension of the fixed recoverable costs regime to cases of higher value and across a broad range of claim types again subject to further consultation Increasing the Small Claims Track upper limit to 10,000 with a further increase to 15,000 after evaluation of

the effects of the increase to 10,000. This will not apply to personal injury claims All Small Track claims to be automatically referred to the Small Claims Mediation service. Parties to the claim will be required to cooperate with a mediator but will not be obliged to go through the full mediation process. No implementation dates or timescales have been given for any of the proposed changes in the response itself but a covering e-mail said that the Government would look to introduce the changes through secondary legislation such as the Civil Procedure rules by April 2013. Comment: The response has been criticised by some commentators as indecisive and as a missed opportunity to help deliver a more cost effective and efficient claims process. Despite recent statements from several Government representatives (including the Prime Minister) to the effect that the Government remains firmly committed to reform of civil litigation, the reform process appears to be losing some momentum.

4 Technical claims brief, monthly update March 2012

Costs Early Part 36 offer effective: SG (A Child...) v HK Hewett High Court (2011)
The court was asked to rule on the claimants entitlement to costs following his acceptance of a Part 36 offer over two years after it was made. The offer had been stated as being open for acceptance for the usual 21 days but was not withdrawn thereafter. The Claimant was a minor with a brain injury and the settlement was approved by the court. The Claimants solicitors argued that they could not have advised their client to accept the offer at the time because the available medical evidence did not give a certain enough prognosis. The Defendants case was that the offer was sufficiently generous that despite the uncertainty of the prognosis it was reasonable for the claimant to be put at risk on costs. The Court held that the normal costs consequences of Part 36 should apply. The claimant would be responsible for the defendants costs from the date of the expiry of the normal acceptance period and the defendant would only have to pay the claimants costs up to that point. The Court had the power to depart from the normal rule but only in exceptional circumstances and the mere fact that there was uncertainty over the value of the claim was insufficient. The fact that the claimant was a minor suing by a litigation friend was not material. Comment: Claimant solicitors will often argue that they cannot consider early Part 36 offers without a firm prognosis. As this case shows however, an early offer can still be effective.

Interest on costs must run from date of costs order Simcoe v Jacuzzi UK Group Ltd Court of Appeal (2012)
The Court of Appeal has ruled that in the County Court (in England and Wales), interest on costs runs from the date the court makes the order for costs and not the usually much later date that costs are assessed (or agreed). The decision was made on the basis that the County Court did not have the power to alter the date of interest from the general rule that it ran from the date of the order. The fact of there being a Conditional Fee Agreement in place and that the claimant would not therefore be financing the costs personally was held not to be grounds for varying the date of interest.

Comment: This is not good news for the paying party (usually defendants) who for the last year or so have escaped paying interest at 8% from the date of the costs order. The case in question involved costs of 74,000 with damages of only 12,750, prompting the Court of Appeal to comment on the need for the more proportionate costs regime that Lord Justice Jacksons reforms are intended to produce.

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Road Traffic Accident widely defined - Griffin v Wisbech Phab Club Supreme Court Costs Office (2011)
The claimant was injured when she toppled over in her wheelchair as it was being raised into a vehicle by a hydraulic platform attached to it. The Phab Club employee who was assisting the claimant into the vehicle had failed to put on the wheelchairs brakes or to secure the claimants seat belt. The claimant was awarded costs on the standard basis but the defendants appealed arguing that the accident was a road traffic accident arising out of the use of a motor vehicle. If the accident was a road traffic accident then the claimant would only be entitled to predictive costs under Civil Procedure Rule (CPR) Part 45. His Honour Judge Darroch upheld the appeal finding that the accident had arisen out of the use of a motor vehicle and that CPR45 applied. The platform was physically part of the vehicle and at the time of the accident, the claimant was being moved into it to be driven. Predictive costs applied. In reaching his decision, the judge considered the Court of Appeal decision in Dunthorne v Bentley and Cornhill Insurance. In that case, the claimant had been injured when the fist defendant ran in front of his car to get some petrol for her own vehicle. That claim was held to arise from the use of a motor vehicle. Comment: This case serves as a reminder that the definition of a road traffic accident is a broad one and the costs implications of such a finding can be very helpful to defendants.

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Liability Passenger injured in course of crime unable to claim: Delaney v Pickett and Tradewise Insurance - Court of Appeal (2011)
The claimant was catastrophically injured whilst travelling in the first defendants car. After the accident, both men were found to be carrying commercial quantities of cannabis. The first defendants insurers declared his policy void when he admitted he was a habitual drug user. The insurers successfully argued that as the use of the car had been to supply drugs and the passenger must have known that the vehicle was being used in

the course of crime, they were entitled to reject his claim under the Motor Insurers Bureau (MIB) Agreement clause 6 (1) (e) iii. The judge also found that the claim failed on the principle of ex turpi causa non oritur actio (an illegal or immoral act cannot be the foundation for an action for damages). The claimant appealed. The Court of Appeal, found that on the facts the use of the car was for the transportation of illegal drugs and not for the driver to show the claimant his new car as he had claimed. The doctrine of ex turpi causa did not however apply as the accident had come about through poor driving and not directly from the illegal activity. The claim failed however because the MIB Agreement exclusion applied. The vehicle was clearly

being used in furtherance and in the course of a crime. The term crime in the Agreement should not be read as being restricted to serious crime as that would make the clause largely ineffective. Comment: L.J. Ward gave a dissenting Judgment to the effect that only serious crime precluded damages under the MIB Agreement. Fortunately, for insurers, the majority judgment was that the exclusion did not only refer to serious crime. Had the Court of Appeal found that it did, use of the exclusion would have been greatly limited in future.

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Vicarious Liability for Assault at Work: Richard Waddell v Barchester Healthcare Ltd and Wallbank v Wallbank Fox Designs Ltd - Court of Appeal (2012)
The two claimants in these conjoined appeals sought damages from their employers after being assaulted by junior members of staff at work. Both claimants had been unsuccessful at first instance. In the Waddell case, the claimant was a care home manager who had rung up a member of staff to ask him to cover for a sick colleague on a night shift. The member of staff, who had been drinking, took exception to the claimants request. He refused to come in and later telephoned the claimant to say that he

resigned. Some twenty minutes later, he cycled into work and assaulted the claimant. The judge at first instance held that the assailant was acting on a frolic of his own and that his employers were not vicariously liable for his actions. In the Wallbank case, the claimant was assaulted when he asked a member of staff to put more furniture frames into an industrial oven for coating. The judge at first instance again held that the employers were not vicariously liable because the assault took the employee outside the course of his employment. The Court of Appeal held that the employers were not vicariously liable in the Waddell case. The assailant had been off duty at the time of the assault and there had been a twenty-minute gap between

the request to cover the night shift and the assault on the claimant. There was insufficient connection between the employees work and the assault. In the Wallbank case, the court held that the employers were liable. The assault had been a direct reaction to an instruction given in the workplace and although the reaction had been irrational, it was still part of employment. Comment: Vicarious liability is a complex and arguably expanding doctrine. An employer can no longer escape responsibility for the act of an employee simply because it was illegal. The test is one of the closeness of the connection between an employees duties and his wrongdoings. In the above cases, the closeness of the assaults in time and space to their employment was the key factor. Our thanks go to Plexus Law who acted for the defendants in the Waddell action for their helpful note on this case.

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Quantum 92 year old Mesothelioma victim receives significant General Damages Award: Dennis Ball v Secretary for Energy and Climate Change High Court (2012)
The claimant was a former National Coal Board employee who was diagnosed as suffering from Mesothelioma at the age of 92. He sought damages for negligent exposure to asbestos. All heads of damages were agreed apart from his claim for Pain, Suffering and Loss of Amenity (PSLA), which the court was asked to determine. The defendants argued that due to the claimants advanced age he had not suffered much loss of amenity and that his activities were little different from what they would have been had he not developed the disease. He had been forced to leave his flat to live in a nursing home but this might soon have happened anyway due to his advancing age. An award at the bottom of the current (tenth) Judicial Studies Board (JSB) guidelines bracket for Mesothelioma of 35,000 to 40,000 was appropriate. The claimants Counsel argued that the claimants damages should not be significantly reduced due to his age. Although he had a short life expectancy, his few remaining years were precious to him and he had been deprived of his independence. An appropriate award was one at the lower end of the previous range as published in the ninth edition of the JSB 60,000 to 65,000. Taking all the factors into account the judge made an award of 50,000.

Comment: this case has been reported as opening the way for higher general damages awards to the elderly. The judge in this case did award more than might have been expected but he took into account the loss of the claimants independence, which will not be a factor in every case. The award still recognises that the claimant suffered less loss of amenity than would a younger man.

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Completed 23 February 2012 written by and copy judgments and/or source material for the above available from John Tutton (contact no: 01245 272 756, e-mail: john.tutton@uk.qbe.com).

Disclaimer
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