Technical claims brief

Monthly update August 2011

Contents
Monthly update Aug 2011 News
Insurers to Finance Anti Insurance Fraud Police Unit and Register Second-ever UK Corporate Manslaughter Charge brought by Crown Prosecution Service UK Businesses foresee Tough Times Ahead UK Accident Victims Details Sold to Solicitors

Liability 1
1 School not Liable for Failure to clear Rainwater: Maddison Hufton v Somerset County Council Court of Appeal (2011)

Unsigned Steps not hazardous to Wheelchair Users: Brenda Clark v Bourne Leisure - Court of Appeal (2011) 10

Quantum
2 Court Allows Cost of Alternative Treatment: Mohammed Najib v John Laing Plc - High Court (2011) Record Irish Damages Award: Ingle v Petmania and OKeefes of Kilkenny Ltd and Health Service Executive - Irish High Court (2011)

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Costs
Contribution Claims may Include Costs: Mouchel Ltd v Oord (UK) Ltd High Court (2011) Judge entitled to Penalise poor Conduct: Abbott v David Long Court of Appeal (2011) Part 36 Costs Consequences Apply despite Exaggeration of Claim: Trevor Fox v Foundation Piling Ltd Court of Appeal (2011) Retention of Tendered Payment deemed to be satisfaction of Costs: Ida Okadigbo v The Commissioner of Police for the Metropolis Supreme Courts Costs Office (2011)

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Disclaimer

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Fraud
Claimant jailed for signing False Statement of Claim: Edward Nield and Acromas Insurance Co Ltd v Graham Loveday and Susan Loveday - District Court (2011)

News Insurers to finance Anti Insurance Fraud Police Unit and Register
The General Insurance Council has committed to funding a dedicated police insurance fraud investigation unit and an insurance fraud register. The police unit is due to become operational on 1 January 2012. It will investigate insurance fraud cases reported by insurers, regional police forces and the Insurance Fraud Bureau. It will have 35 full-time police officers and other specialist support staff led by a Detective

Chief Inspector. It will also have access to specialist police resources such as surveillance and forensic teams. The unit will be based at the City of London Police headquarters but will operate throughout England and Wales with facilities to investigate cases in Northern Ireland and Scotland. The Insurance Fraud Register is a database owned by the insurance industry, which will pool details of all known insurance fraudsters. It is due to become operational in early 2012.

Comment: the Governments Transport Select Committee called on insurers back in March of this year to do more to tackle insurance fraud generally and specifically to fund a specialist anti-insurance fraud police unit (see April 2011 Brief). The industry has responded positively and can only hope that the judiciary will act in a similarly positive vein to insure that fraudsters caught by the new police unit are punished appropriately.

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Second-ever UK Corporate Manslaughter charge brought by Crown Prosecution Service

The Crown Prosecution Service (CPS) has announced that Lion Steel Equipment Ltd will become the second company to be prosecuted under the Corporate Manslaughter and Homicide Act 2007 (CMHA). The charge arises from the death of an employee who fell through the roof of the companys headquarters building in 2008. Three of the companys directors will also be charged with gross negligence manslaughter under the CMHA. The first hearing is scheduled for 2 August 2011 at Tameside Magistrates Court. Comment: the only other company to be prosecuted under the CMHA to date was a small company, which could not afford to pay the level of fine set out in the sentencing guidelines. Cotswold Geotechnical Holdings were fined 385k as opposed to the 500,000 to several million pounds fines set out in the guidelines. The case will hopefully give some guidance as to the level of fines a larger company is likely to face.

UK businesses foresee tough times ahead

QBEs sixth national survey of UK businesses paints a rather gloomy picture of fragile economic recovery. The survey of 400 UK businesses of all sizes reveals that 72% of businesses expect a full economic recovery to take two or more years and that 43% will find it difficult to continue trading if current economic conditions continue for another 12 months. Inflationary pressures are hampering recovery with 57% citing the negative impact of rising commodity prices.

On a more positive note 60% of businesses say that they are now operating more efficiently and 42% have benefitted from the demise of competitors suggesting that businesses that can survive the recession may prosper in future. Comment: Terry Whittaker QBEs Managing Director Distribution has warned businesses against cutting corners on insurance cover and that opting for the cheapest quote ahead of quality of service and financial strength of the provider could prove to be a false economy.

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UK accident victims details sold to solicitors

The controversy over referral fees paid by solicitors for new personal injury claims work continues. The Daily Mail reports that an MEP representing North West England has called for an inquiry into allegations that two Merseyside NHS Hospitals sold the details of accident victims to unscrupulous lawyers. This follows earlier reports in the Mail and Times that some UK police forces have made large sums of money by selling information about road traffic accidents. The Mail reports that this practice is widespread and that West Midlands Police made 622,000 in a single year from passing on the details of 24,891 accidents.

Comment: referral fees have been blamed for increasing the annual cost of road traffic accident personal injury claims when the number of accidents is actually decreasing. The Association of British Insurers has called for a ban on these fees.

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Costs Contribution claims may include costs: Mouchel Ltd v Oord (UK) Ltd - High Court (2011)
The claimant brought third party proceedings against the defendant. They had both been sub-contractors on the same civil engineering project. The claimant sought a contribution to a claim it had settled from the main contractors in respect of remedial work. The largest element of the agreed settlement (almost four fifths) was in respect of the main contractors costs. The court was asked to determine whether the defendant must contribute to the sum paid by the claimant for the main contractors costs and whether they should also contribute to the claimants own costs incurred in the original litigation with the main contractor. The court held that contribution under the Civil Liability (Contribution) Act 1978 was not limited to a contribution to damages but to liability for damage including costs. Where matters had been settled on a global basis, then unless there was strong evidence to support differentiating between costs and damages, the costs contribution should be in the same proportion as the damages contribution (only just over 8% in this case).

There were however, no grounds to order a contribution to the claimants defence costs under the Act because these did not form any part of the claimants liability to the main contractors. Comment: a party which settles with a claimant may seek a contribution from a third party in respect of liability for damage including costs but will not recover their own defence costs unless the third partys conduct in some way prompts the court to use its discretion under the Senior Courts Act to order the third party to pay.

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Judge entitled to penalise poor conduct: Abbott v David Long - Court of Appeal (2011)
Following a road traffic accident the claimant successfully obtained damages from the defendant at a hearing but had his claim for car hire charges reduced from 48,000 to 8,600. The judge held that the hire claim was grossly exaggerated and made no order as to costs (effectively leaving the parties to bear their own costs). The claimant appealed arguing that as he had been successful at trial in overcoming the defendants denial of liability he should be awarded his costs. The Court of Appeal first considered the Civil Procedure Rules (CPR). For the claimant to succeed in overturning the Judges decision on costs he must show that she had erred in principle or that her decision was perverse (CPR 44.3). The judge at first instance had held that the litigation had been controlled by the hire company and that a serial litigant such as this should have a system in place to ensure that litigation was conducted carefully. Their conduct had been blameworthy. The defendant had failed to make any settlement offer but had the hirers acted more reasonably one might have been made.

Overall, the claimant could not establish that the judges decision was either perverse or wrong in principle. The judge was entitled to reach the decision she did to take account of the conduct that she had found.

Claimant: The Court of Appeal has once again confirmed that trial judges enjoy considerable discretion to punish poor conduct in litigation and that the threshold to overturn their rulings is a high one.

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Part 36 Costs consequences apply despite exaggeration of claim: Trevor Fox v Foundation Piling Ltd - Court of Appeal (2011)
The claimant injured his lumbar spine after falling at work. Liability was admitted by his employers. The claimant alleged that he had suffered serious injury and served a schedule claiming financial loss in excess of 280,000 plus general damages. The defendant however had obtained surveillance evidence showing that the claimant was not as seriously injured as he alleged. The defendant had also obtained medical evidence saying that any genuine symptoms were due to the acceleration of a pre-existing condition. The defendant made a Part 36 offer of 63,000 of which the claimant would receive 23,550 net of recoverable Compensation Recovery Unit (CRU) benefits. The claimant rejected this offer and made a counter offer of 150,000 worth 110,551 to the claimant net of CRU benefits. Following the receipt of a joint medical report confirming that the claimant was suffering a one or two-year acceleration of a pre-existing condition, he revised his claim down to 59,451 plus general damages. In response, the defendant made a new Part 36 offer of 37,500 worth 31,702 to the claimant. The total offer figure was less but the claimant would actually receive more as the amount of repayable CRU benefits to be refunded had reduced because of the shorter period of incapacity caused by the accident. Settlement was agreed with costs to be determined by the court.

The judge at first instance ordered the claimant to pay the costs of the defendant from the date of expiry of the first Part 36 offer on the basis that the defendant was the successful party and that his conduct in exaggerating his claim justified a costs order against him. The claimant appealed. The Court of Appeal held on the first issue that Part 36.10 of the Civil Procedure Rules (CPR) was clear that when assessing whether a claimant had beaten a Part 36 offer it was the net amount that the claimant received after CRU benefits were refunded that counted, not the value of the gross offer. On this basis, the claimant had clearly done better on the second offer than the first and the defendant was not the successful party. On the second issue, the claimant had recovered much less, than he originally claimed but the trial judge had not found him guilty of any misrepresentation and it was not for the Court of Appeal to make this finding. The claimants conduct did not therefore justify the costs order against him. The defendant had medical and surveillance evidence at an early stage and should have protected their position by making a realistic Part 36 offer at an early stage. The courts had gone too far in moving away from a strict interpretation of Part 36 and this had led to uncertainty and expensive satellite litigation. The claimants appeal was allowed.

In the context of personal Injury litigation where the claimant has a strong case on liability but quantum is inflated, the defendants remedy is to make a modest Part 36 offer. If the defendant fails to make a sufficient Part 36 offer at the first opportunity, it cannot expect to secure costs protection. Different considerations may arise in cases where the claimant is proved to be dishonest, but (on the judges findings) that is not the case. Lord Justice Jackson

Comment: The Court of Appeal did not agree with a trial judge penalising exaggeration in this case but did approve it in the Abbot V Long case above. There were no Part 36 offers in Abbott and this judgment is perhaps another indication of Lord Justice Jacksons determination to ensure that Part 36 is interpreted strictly and consistently.

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Retention of tendered payment deemed to be satisfaction of costs: Ida Okadigbo v The Commissioner of Police for the Metropolis - Supreme Courts costs Office (2011)
In late November of 2010, the defendant made a Civil Procedure Rules (CPR) Part 47.19 offer for roughly a third of the claimants costs, stated to be in full and final settlement. A cheque for the sum offered was sent with the letter and although the claimants solicitors did not respond to the offer letter, they banked the cheque 12 days later. Having heard nothing for some eight weeks the defendant wrote to the claimants solicitors saying that the parties had achieved an accord and satisfaction i.e. the claimants costs were settled. The claimants solicitors responded saying that simply because they had not replied to the defendants offer letter it did not mean that the offer had been accepted and subsequently set the matter down for a detailed assessment hearing. The court was asked to decide as a preliminary issue whether the parties had achieved an accord and satisfaction.

The defendant cited Court of Appeal guidance on commercial cases that the test was what a reasonable person would have been led to believe by the conduct of the other party. The claimant countered that payments made under CPR 47.19 should be viewed in the light of normal costs practices where cheques could be accepted either in full and final settlement or as payment on account. Senior Costs Judge Hurst rejected the claimants arguments. He saw no reason why the legal principles governing commercial transactions could not also be applied to costs. The defendants offer was clear and if the claimant had wished to reject it whilst retaining the money tendered then (in line with the Court of Appeal decision in Stour Valley Builders v Mr and Mrs TP Stuart) she should have made her position clear within a

reasonable period. On the facts of this particular case, a reasonable period would have been three weeks. The parties had achieved an accord and satisfaction. Comment: although the length of a reasonable period will vary depending on the facts of a case, a party receiving a cheque in support of an offer they wish to reject, should make their position clear as soon as possible after banking the money. Our thanks go to Weightmans Solicitors for telling us about this case.

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Fraud Claimant jailed for signing false Statement of Claim: Edward Nield and Acromas Insurance Co Ltd v Graham Loveday and Susan Loveday District Court (2011)
The applicants Mr Nield and his insurers Acromas sought to have the respondents Mr Loveday and his wife committed for contempt of court following an injury claim made by Loveday. The respondent Loveday alleged that he had become a housebound invalid after being injured in a road traffic accident with Nield. Liability was admitted by Nield but the extent of Lovedays injuries was disputed. Nields insurers obtained surveillance evidence showing that Loveday could drive, walk unaided, climb steps without difficulty and work on cars all of which he claimed he was unable to do post accident. It was also discovered that he had driven to Italy and back on holiday rather than been pushed through the airport in a wheelchair in order to fly there. Faced with this evidence Loveday agreed to settle the original action for a small proportion of the sum claimed and agreed to pay Neilds costs. Loveday had set out the false claims about his injuries in a signed witness statement supported by a signed witness statement from his wife. At the application hearing, Mrs Loveday admitted contempt of court but Mr Loveday maintained he had not known what he was verifying. Mr Loveday was found guilty of contempt. The judge held that he had misled his solicitor who drafted his witness statement and that Loveday had clearly known its exact contents as the draft copy was marked with many handwritten annotations containing information known only to him. Both Loveday and his wife understood the risks of signing statements they knew to be untrue as his solicitor had warned them in writing that they could be jailed for contempt. Loveday must have known that his blatantly false statements would interfere with the course of justice. He was given a nine month custodial sentence. His wife received a six month sentence suspended for eighteen months in light of her guilty plea and previous good character. Comment: the custodial sentence passed on this blatant fraudster will hopefully, have some deterrent effect on others seeking to grossly exaggerate their claims.

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Liability School not liable for failure to clear Rainwater: Maddison Hufton v Somerset County Council - Court of Appeal (2011)
A schoolgirl suffered a serious ligament injury to one knee when she slipped on a wet floor in her school hall. She brought proceedings alleging that the school staff had been negligent in permitting pupils to walk directly from the playground into the hall when it was raining, making the floor wet. The school denied liability. When it was raining, the direct entrance was closed to pupils who were then only permitted to enter via a foyer, which stopped them treading water into the hall. At first instance, the judge dismissed the claim finding that the schools procedures were reasonable and that the claimant had simply suffered an unfortunate accident. The claimant appealed arguing that the school was negligent in having no proper system for stopping the floor getting wet or for drying it if it did become wet. 9 Technical claims brief, monthly update Aug 2011

The Court of Appeal held that the schools risk assessment was reasonable and had identified and put in place appropriate control measures. If rain started during a break, it would take a little while to close off the direct entrance to the hall and this was probably what had happened when the accident occurred. The measures in place met the standard of reasonable care the law required. The evidence was that this was not a frequent problem requiring a system for mopping water up.

It is not possible, and the law does not require, the occupier of premises to take measures, which would absolutely prevent any accident from ever occurring. What is required both by common law and by section 2 of the Occupiers Liability Act 1957 is the exercise of reasonable care. Lord Justice Jackson

Comment: occupiers in England and Wales may take some comfort that the Court of Appeal has recognised that the defendants could not realistically cater for every small brief accumulation of water that might cause a fall. The law requires only a reasonable standard of care of occupiers.

Unsigned steps not hazardous to wheelchair users: Brenda Clark v Bourne Leisure - Court of Appeal (2011)
The claimant suffered serious injury when she tried to negotiate steps at the defendants bar in her wheelchair and fell out. The bar was on two levels with the different levels connected by a ramp on one side of the room and steps on the other. The claimant travelled up the ramp to the upper level but later tried to go back down the steps mistaking them for another ramp. At first instance, the claimant successfully argued that the steps were a concealed hazard and that the premises were in breach of the Occupiers Liability Act 1957. The defendant appealed. The Court of Appeal held that the judge at first instance had erred in placing too great a weight on pre-action correspondence. The defendants legal department had mistakenly claimed that there were signs and warning tape at the top of the steps to warn people of the drop in level when in fact there were not. The judge had erred in interpreting this as an admission by the defendant that warning signs and tape should have been placed at the top of the stairs. In any event, what others including the defendant, thought about safety, whilst relevant, should not be determinative.

It was for the judge to come to his own decision. On the evidence, the ramp provided a safe means for the claimant to go from one level to another. The stairs were clearly visible and any wheelchair user taking reasonable care for his or her safety would avoid using them. The premises were reasonably safe for wheelchair users. The appeal was allowed.

I think that the judge was wrong to conclude that the claims about signage and tape amounted to a concession that such measures were necessary. I think Mr Aldis (defendant counsel) is right to say that the parties appear to have been at cross-purposes for much of the time. Also it appears that the person in the legal department of Bourne Leisure Ltd had not at any stage taken full written instruction from Mr Green the manager. She was no doubt unwise to write as she did but I do not think that her words could be taken as a concession as to the need for warning signs or tape in relation to the steps. Dame Janet Smith

Comment: This case serves as a reminder to be very careful about what is said in pre-action correspondence and to investigate thoroughly before discussing liability with a claimants solicitor. The defendants legal department appear to have been confused as to the circumstances of the accident and were corresponding with the claimants solicitors without first obtaining full instructions from the defendants site manager. They were fortunate that their inaccurate written comments did not prejudice the defence.

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Quantum Court Allows Cost of Alternative Treatment: Mohammed Najib v John Laing Plc - High Court (2011)
The claimant contracted mesothelioma after exposure to asbestos whilst employed by the defendant company. He sought damages including a sum of just over 15,000 for photodynamic therapy. This was a treatment not available through the NHS and well outside of mainstream medicine where high doses of light were used to try to destroy cancerous cells. The defendants objected to paying for this treatment which had failed to reduce the tumour and which was not supported by the claimants treating NHS physicians. The claimant had opted for this unusual treatment because he had been told it could extend his life and because the feared the painful side effects of chemotherapy.

The court allowed the cost of the treatment on the basis that, although the treating physicians had not endorsed it, neither had they told the claimant not to have it. The doctor who had told the claimant about the treatment also appeared to have appropriate medical qualification. The treatment was expensive but not unreasonably so given that the claimant had been told it could extend his life expectancy from two to seven years. Comment: A court may well have sympathy for a claimant suffering pain and/or reduced life expectancy and on the basis of this judgment is unlikely to disallow the cost of alternative therapies unless the claimant has been told in plain terms that they will be ineffective.

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Record Irish Damages Award: Ingle v Petmania and OKeefes of Kilkenny Ltd and Health Service Executive Irish High Court (2011)
The claimant suffered catastrophic brain damage after contracting chlamydia psittacosis, a bird disease that can also infect humans, at her place of work. The disease can be spread by dust from the dried faeces of infected birds. The claimant is thought to have inhaled infected dust whilst working in a pet shop that had failed to properly clean its parrot cages or provide adequate health and safety training. The claimant received a lump sum of 3m and will also receive periodical payments to cover the cost of her annual care once enabling legislation is in place. The unfortunate claimant cannot breathe normally, feed herself or walk and requires 24-hour care estimated as costing 450k a year. Assuming the claimant lives as long as she is expected to her total damages could exceed the current record for the largest Irish personal injury settlement of 7.5m. Comment: another Irish case has been ear marked for periodical payments despite the fact that enabling legislation for this type of settlement is not yet in force. Drafting enabling legislation is proving difficult, as the Irish state is not in a position to offer a convincing guarantee of payments in the event that a compensator fails.

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Completed 18th July 2011 - written by and copy judgments and/or source material for the above available from John Tutton (contact no: 01245 272756, 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 organization. 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.

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