Technical claims brief

Monthly update April 2012

Contents
News 1
Supreme Court resolves trigger litigation issue Jackson reforms suffer setback on disease claims NHS recoverable charges increase from 1 April 2012 Health and Safety Executive delays intervention fee 1 2 3 3

Quantum

Privy Council supports Guernsey discount rate decision: Helmot v Simon Privy Council (2012) 9

Disclaimer 10

Costs
Court of Appeal restricts Costs for Children with minor injuries: Dockerill and Healey v Tullet; Macefield v Bakos; Tubridy v Sawar Court of Appeal (2012)

Fraud 5
More fraudsters jailed for contrived accident claim: Liverpool Victoria Insurance Company Limited v Bashir and Ors High Court (2012)

Liability
No link between Work-place Stress and Chronic Fatigue Syndrome: MacLennan v Hartford Europe Ltd High Court (2012) No duty on occupiers over dangers on neighbouring land: Armstrong (By her Mother...) v Keepmoat Homes Ltd, Northumberland County Council and Blyth Valley Borough Council High Court (2012) Police driver failed to follow pursuit policy: Smith v Chief Constable of Nottinghamshire Court of Appeal (2012)

News Supreme Court resolves trigger litigation issue

The UK Supreme Court (UKSC) has at last handed down judgment in six lead cases dealing with the issue of when Employers Liability (EL) policies are triggered in respect of mesothelioma claims. The cases were referred to the UKSC after the Court of Appeal ruled that where the wording used is sustained the policy in force at the time the disease starts to develop responds and where the wording used is contracted the policy in force at the time of negligent exposure responds (see November 2011 Brief). The Court of Appeal ruling has now been overturned by a unanimous UKSC ruling that both sustained and contracted mean caused or initiated by exposure to asbestos during the policy period. To make this ruling the UKSC adopted the interpretation of the policy wording most consistent with business common sense (following the Supreme Courts previous decision in Rainy Sky SA v Kookmin Bank). They also considered the requirements under the Workers Compensation Acts and The Employers Liability (Compulsory Insurance) Act 1969 for a causation based wording triggered by exposure to avoid the difficulty of establishing when a disease begins and avoid the risk of employer insolvency or non-insurance. They held that they were not obliged to follow the Court of Appeals ruling in Bolton MBC v MMI and Others or to consider Public Liability (PL) triggers as the legal regime for PL and EL was simply different. Comment: The Court of Appeal decision was regarded by most commentators as unsatisfactory. It put the compensation of some mesothelioma victims in doubt and lead to some underwriters being faced with additional liabilities that they could not have anticipated when setting premiums. The Supreme Court decision has now made the compensation of mesothelioma victims more certain and restored clarity and simplicity to the handling of these claims. The full judgment can be viewed at the Supreme Court website at: www.supremecourt.gov.uk .

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Jackson reforms suffer setback on disease claims

The Legal Aid Sentencing and Punishment of Offenders (LASPO) Bill completed a bumpy ride through the House of Lords, with the Government defeated on two important amendments. The first amendment carried reinstates the recoverability of Success Fees and After the Event (ATE) Insurance Premiums for claims for compensation for respiratory illness or disease arising from industrial exposure to a harmful substance (such as asbestos).

The second amendment carried goes even further, preserving Success Fees and ATEs for all industrial disease claims. It is not known at this stage whether the Government will seek to reverse these amendments when the Bill returns to the Commons. Comment: TThe LASPO bill is the statutory means of introducing those parts of Lord Justice Jacksons reforms of civil litigation funding in England and Wales that require primary legislation. The ending of the recoverability (from defendants) of success fees and ATEs is intended to

deliver substantial savings on litigation costs and any exemptions from this will inevitably lessen the impact of the reforms. Our thanks go to Berrymans Lace Mawer LLP for their helpful note on the progress of the Bill in the Lords.

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NHS recoverable charges increase from 1 April 2012

From 1 April 2012 the recoverable NHS charges payable by compensators in respect of accidents leading to medical treatment will increase as set out below. Current Tariff Treatment without admission Daily rate treatment with admission Per ambulance journey Cap in any one case 600 From 1 April 2012 615

Health and Safety Executive delays intervention fee

The Health and Safety Executive (HSE) has announced that the planned introduction date of the Fee for Intervention (FFI) scheme (see October 2010 Brief) is to be put back until the next available opportunity, probably until October of 2012. The charge will be levied where an HSE Inspector identifies that a duty holder has committed a material breach leading to a formal intervention in writing. Key features of FFI are: It will apply to improvement or prohibition notices issued by email or letter It will not apply to verbal advice

737

755

181 44,056

185 45,153

It will not alter the current regime for high risk sectors such as the nuclear or chemical industries, where a costs recovery scheme is already in place The HSE will charge 124 for every hour of work the inspector undertakes to identify the breach and see the improvement through. The HSE says that it will use the additional time to work with businesses to help them understand how the scheme will work. Comment: The scheme will no doubt provide much needed revenue for the HSE at a time when its budget is being cut back by the Government. The extra cost to businesses is justified by the HSE on the basis that it will drive compliance, particularly amongst those who currently breach regulation.

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Costs Court of Appeal restricts Costs for Children with minor injuries: Dockerill and Healey v Tullet; Macefield v Bakos; Tubridy v Sawar Court of Appeal (2012)
In these conjoined appeals, the Court of Appeal considered what entitlement children had to costs in low value Road Traffic Accident (RTA) personal injury cases in England and Wales. The defendants in the first two cases appealed against costs being awarded to the claimants on a predictable costs basis where the claims had settled for less than 1000 each. They argued that the child claimants should be subject to the

same restrictions as adults for cases which normally fell within the Small Track. In the third case, the defendant appealed against a decision to allow Counsels fees for attending an approval hearing on an award of only 2,100 under the predictable costs rules. On the first two cases, the Court of Appeal ruled that the predictable costs rules do not apply to child claims under 1,000 in value and that each item of costs claimed should be scrutinised and only allowed for unusual work outside of the scope of the Small Track such as the costs of an approval hearing. On the issue of Counsels fee for attending an approval hearing, this should only be allowed in addition to fixed costs where there is some complexity in a case (although a

counsels fee for advice on the amount of the settlement would usually be allowed). Comment: For settlements under 1,000 in value, the approach of scrutinising costs will produce a lower figure than the predictable costs rules or the Ministry of Justice (MOJ) RTA process. For claims between 1,000 and 2,000 in value, predictable costs will apply and be cheaper than the MOJ RTA process costs (if the claim is dealt with outside of that scheme). The Court of Appeal decision means that costs savings should be available but claims handlers will have to be careful about the wording they use when agreeing or offering to pay costs.

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Fraud More fraudsters jailed for contrived accident claim: Liverpool Victoria Insurance Company Limited v Bashir and Ors High Court (2012)
The four respondents made claims for vehicle damage and personal injury arising from a motor accident that had not really taken place. The first two respondents, Mr and Mrs Bashir, had been approached by an acquaintance who offered them a fee to make fraudulent claims. Mrs Bashirs parents were also drawn into the conspiracy.

The respondents later admitted that the claims were fraudulent and assisted the insurers they had tried to defraud by giving them details of the person who had lured them into the fraud and of how it was organised. The Court held that despite the Bashirs having very young children, one of whom was still breast-feeding, a custodial sentence was appropriate. The sentence could have been well in excess of twelve months but given the Bashirs co-operation with the insurers a substantial reduction was made and both of them were given custodial sentences of six weeks.

Mrs Bashirs parents, who were in their seventies, in ill health and had a lesser involvement in the conspiracy escaped with six week suspended sentences. Comment: This was the first committal for contempt to come before the courts involving a contrived (made up) accident as opposed to gross exaggeration of a claim. The custodial sentences imposed on the Bashirs demonstrate how seriously the court viewed their attempts to interfere with the course of justice even though they were not the organisers of the fraud.

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Liability No link between Work-place Stress and Chronic Fatigue Syndrome: MacLennan v Hartford Europe Ltd High Court (2012)
The claimant was employed by the defendant as an HR Manager. She alleged that she had suffered work place stress due to working excessive hours and being caught up in a dispute between two senior directors. The stress had weakened her immune system leading her to suffer frequent infections culminating in Chicken Pox, which in turn led to Chronic Fatigue Syndrome (CFS). The claimant did not return to work after contracting CFS and submitted a 1.25m claim including future loss of earnings until retirement. The Judge dismissed the claim finding that there was no causal link between work place stress and immune system deficiency or CFS. Even if there had been such a link, the claim would have failed on grounds of foreseeability. The defendants had produced evidence in the form of e-mail correspondence in which the claimant said that whilst working hard she was enjoying her job, had a good working relationship with the HR Director and was well supported by the business. The claimant as an HR manager should have known the steps to take if she believed her health was at risk due to her work. In the absence of complaint by an employee (or other prior indication), an employer was entitled to assume that they could withstand the normal pressures of their job.

Comment: The ruling that there was no causal link between work place stress and CFS, can now be cited in defence of future stress claims made on this basis. The decision reaffirms that foreseeability remains a good defence in stress claims where there is no prior indication of a stress problem and an employee fails to complain to her employers. It also highlights the importance of keeping records of e-mail correspondence. Our thanks go to Kennedys Solicitors who acted for the defendants, for their helpful note on this case.

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No duty on occupiers over dangers on neighbouring land: Armstrong (By her Mother...) v Keepmoat Homes Ltd, Northumberland County Council and Blyth Valley Borough Council High Court (2012)
The claimant suffered catastrophic injuries when she was struck by a car on a busy dual carriageway. The claimant had walked onto the road by using a path that led through a gap in thick vegetation. She sought damages from a construction company whom she alleged had removed a fence that would have stopped her walking onto the road and against the local councils, who owned the land the path was on, for failing to prevent visitors walking onto the road. (No claim was brought against the driver of the car probably because he could not have avoided the claimant who walked directly into his path). The claim against the first defendant was dismissed as there was no evidence that they had removed the fence.

The court found that the second and third defendants had constructive knowledge of the existence of the path and had effectively consented to its use by the public. The claimant was a lawful visitor under the terms of the Occupiers Liability Act 1957 but there was no duty under the Act or at common law to protect a visitor from danger on neighbouring land. Comment: This is a helpful decision for occupiers drawing a clear distinction between the dangers on an occupiers land and those on land adjacent to it. The court may have been influenced by the fact that there was a subway and a footbridge nearby which the claimant could easily have used to safely cross the road. Our thanks go to Plexus Law who acted for the first defendant, for their helpful note on this case.

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Comment: The case demonstrates the importance that courts place on Police driving policies and that drivers of emergency vehicles must balance the need to reach an emergency location quickly with the safety of other road users. The defendants and their insurers (QBE) were at least successful in achieving a 30% finding of contributory negligence on what is likely to be a high value claim.

Police driver failed to follow pursuit policy: Smith v Chief Constable of Nottinghamshire Court of Appeal (2012)
The 16-year-old claimant was struck by a police car whilst crossing a fourlane road in Nottingham city centre late on a Saturday night. She had been out with friends and was reported by some witnesses to have been drinking. She had reached the third lane of the well-lit carriageway (i.e. close to the other side of the road) when she was struck by the police car. The police driver was responding to an emergency call and had engaged blue flashing lights and siren. The claimant was thrown onto the roof of the car by the impact suffering severe head injuries. At first instance, the judge held that the police driver had been keeping a proper lookout and that the claimant had shown reckless disregard for her own safety.

There was 75% contributory negligence on her part. The claimant appealed. The Court of Appeal found that the judge at first instance had erred in finding that the police driver had kept a proper look out and in failing to refer to the Police Pursuit Driving Policy. The policy required the police driver to take into account both the road conditions and the distance he needed to travel. Expert evidence said that had the officer been travelling 5-10mph more slowly the accident could have been avoided with a delay of only 30 seconds or less. The speed of 45-50mph amounted to negligence given that the police driver would have expected to encounter pedestrians crossing the road some of whom were the worse for drink. The appeal was allowed with a ruling that contributory negligence was only 30%.

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Quantum Privy Council supports Guernsey discount rate decision: Helmot v Simon Privy Council (2012)
The plaintiff was a cyclist who suffered catastrophic injuries when he was struck by the defendants car. He had a large claim for future loss especially for future care but as the case was in the jurisdiction of Guernsey there was no legal framework for a Periodical Payment Order and his settlement had to be on a lump sum basis. Liability was not in dispute. There is no statutory discount rate on Guernsey and in order to calculate the lump sum, the court had first to decide on an appropriate discount rate to apply (to offset the investment return the plaintiff would receive on the early receipt of his future losses). At first instance (see February 2010 Brief), the court set a 1% discount rate for all future losses but on appeal this was amended to 0.5% for non-earnings related items and -1.5% for earnings related items such as carers wages (see October 2010 Brief). The defendants appealed to the Privy Council arguing that the Guernsey Court should not have departed from the discount rate set by the Lord Chancellor for England of Wales of 2.5% for all heads of future loss. The Privy Council ruled that the approach adopted by the Guernsey court was sound having taken proper account of the procedure used in England and Wales and having made appropriate adjustments for economic conditions on Guernsey. The Privy Council recommended that the

Appeal be dismissed and the rates set by the Guernsey Court will now stand. Comment: The ruling will only directly affect cases on Guernsey but will no doubt, be cited by those arguing for a reduction in the rate in other UK jurisdictions as supporting their case. The Lord Chancellor may have been waiting for this Judgment to be handed down before commencing his planned consultation on the discount rate for England and Wales and there is now no apparent barrier to this taking place. The decision on the discount rates in the Helmot case increased the value of the damages from 9.3m to 13.75m and any reduction in the rate for England and Wales could have similarly dramatic effects on large future loss claims.

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Completed 29 March 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
This publication has been produced by QBE Insurance (Europe) Ltd (QIEL). QIEL is a company member of the QBE Insurance Group. Readership of this publication does not create an insurer-client, or other business or legal relationship. This publication provides information about the law to help you to understand and manage risk within your organisation. Legal information is not the same as legal advice. This publication does not purport to provide a definitive statement of the law and is not intended to replace, nor may it be relied upon as a substitute for, specific legal or other professional advice. QIEL has acted in good faith to provide an accurate publication. However, QIEL and the QBE Group do not make any warranties or representations of any kind about the contents of this publication, the accuracy or timeliness of its contents, or the information or explanations given. QIEL and the QBE Group do not have any duty to you, whether in contract, tort, under statute or otherwise with respect to or in connection with this publication or the information contained within it. QIEL and the QBE Group have no obligation to update this report or any information contained within it.

To the fullest extent permitted by law, QIEL and the QBE Group disclaim any responsibility or liability for any loss or damage suffered or cost incurred by you or by any other person arising out of or in connection with you or any other persons reliance on this publication or on the information contained within it and for any omissions or inaccuracies. QBE Insurance (Europe) Limited and QBE Underwriting Limited are authorised and regulated by the Financial Services Authority. QBE Management Services (UK) Limited and QBE Underwriting Services (UK) Limited are both Appointed Representatives of QBE Insurance (Europe) Limited and QBE Underwriting Limited.

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QBE European Operations

Plantation Place 30 Fenchurch Street London EC3M 3BD tel +44 (0)20 7105 4000 fax +44 (0)20 7105 4019 enquiries@uk.qbe.com www.QBEeurope.com

3646/technicalclaimsbrief/april2012 QBE European Operations is a trading name of QBE Insurance (Europe) Limited and QBE Underwriting Limited. QBE Insurance (Europe) Limited and QBE Underwriting Limited are authorised and regulated by the Financial Services Authority. QBE Management Services (UK) Limited and QBE Underwriting Services (UK) Limited are both Appointed Representatives of QBE Insurance (Europe) Limited and QBE Underwriting Limited.