QBE Technical Claims Brief April 2012

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Technical claims briefMoty udat A 2012


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Contents

News 1

Supreme Court resolves trigger

litigation issue 1

Jackson reforms suffer setback on

disease claims 2

NHS recoverable charges increase

from 1 April 2012 3

Health and Safety Executive

delays intervention fee 3

Costs 4

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) 4

Fraud 5

More fraudsters jailed for contrivedaccident claim: Liverpool Victoria

Insurance Company Limited v

Bashir and Ors High Court (2012) 5

Liability 6

No link between Work-place Stress

and Chronic Fatigue Syndrome:

MacLennan v Hartford Europe Ltd

High Court (2012) 6

No duty on occupiers over dangers

on neighbouring land: Armstrong (Byher Mother...) v Keepmoat Homes Ltd,

Northumberland County Council

and Blyth Valley Borough Council

High Court (2012) 7

Police driver failed to follow pursuit

policy: Smith v Chief Constable of

Nottinghamshire Court of

Appeal (2012) 8

Quantum 9

Privy Council supports Guernsey discount

rate decision: Helmot v Simon Privy

Council (2012) 9

Disclaimer 10


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Ta am , moty udat A 2012

1

News

Supreme Court resolvestrigger 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 contractedmean 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) Act1969 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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2

Jackson reforms suffersetback on disease claims

The Legal Aid Sentencing and

Punishment of Offenders (LASPO) Billcompleted 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 theGovernment 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 MawerLLP for their helpful note on the progress

of the Bill in the Lords.


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NHS recoverable chargesincrease 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.

CurrentTariff

From1 April

2012

Treatment

without

admission

600 615

Daily rate

treatment with

admission

737 755

Per ambulance

journey

181 185

Cap in any one

case

44,056 45,153

Health and Safety Executivedelays 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:

Itwillapplytoimprovementor

prohibition notices issued by email or

letter

Itwillnotapplytoverbaladvice

Itwillnotalterthecurrentregimeforhigh risk sectors such as the nuclear

or chemical industries, where a costs

recovery scheme is already in place

TheHSEwillcharge124forevery

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 restrictsCosts for Children with minorinjuries: Dockerill and Healeyv 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 1,000and 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 forcontrived accident claim:

Liverpool Victoria InsuranceCompany Limited v Bashirand 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 wasorganised.

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-placeStress and Chronic FatigueSyndrome: MacLennan vHartford Europe Ltd HighCourt (2012)

The claimant was employed by the

defendant as an HR Manager. She allegedthat 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 goodworking 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 neighbouringland: Armstrong (By herMother...) v KeepmoatHomes Ltd, NorthumberlandCounty Council and BlythValley 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 constructioncompany 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 thatthey had removed the fence.

The court found that the second and third

defendants had constructive knowledgeof 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 1957but 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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Police driver failed to

follow pursuit policy:Smith v Chief Constable ofNottinghamshire Court ofAppeal (2012)

The 16-year-old claimant was struck

by a police car whilst crossing a four-

lane 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 otherside 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 slowlythe 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%.

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.


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Quantum

Privy Council supportsGuernsey discount ratedecision: 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 largeclaim 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 Courtshould 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: [email protected]).

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 purportto 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 Technical Claims Brief April 2012