QBE Liability Roundup

8/13/2019 QBE Liability Roundup

1/11

QBE European Operations

Liability round-up

of 2013


2/11

Liability round-upof 2013

2013 a year of change 1

Jackson and Ministry of Justice reforms 2

Liability 3

Mesothelioma 5

Fraud 6

Scotland 7

Whats on the horizon 8

Disclaimer 9

Contents


3/11

1QBE Liability round-up of 2013

It was a long and expensive road to reform,

but 2013 inally saw the realisation of

many of Lord Justice Jacksons proposals.After much debate, the Ministry of Justice

inally took the bull by the horns, resisted

lastminute objections, and introduced the

most signiicant reforms to the civil justice

system since Lord Woolfs reforms of the

Civil Procedure Rules in 1998.

Not long after, the government added the

Enterprise and Regulatory Reform Act to

the statute book. The aim being to cut

through some of the perceived health and

safety red tape and limit employers liability

claims to acts of negligence. Whether the

Act has a signiicant impact remains to beseen, but few currently see it as a game

changer.

Fraud remains high on the agenda and

2013 saw the continued, and welcomed,

support of the judiciary. FollowingSummers v Fairclough Homes Ltd,judges

are inally prepared to impose the most

severe penalty in the civil arena strikeout

of the entire claim which can be used in

tandem with criminal contempt of court

proceedings and custodial sentences. A

number of decisions have kept fraud in

the spotlight throughout 2013. Of concern,

reported levels of fraud across all lines

of business continue to rise, and whilst

detection is improving, the penalties

imposed do not appear to be acting as a

deterrent to committed fraudsters.

We also saw the Supreme Court lexing

their muscles in Woodland v Essex County

Council,by extending the scope of non

delegable duties. This landmark decision

could have signiicant ramiications for

local authorities, but also underlinesthe increasing frequency of claimants

endeavouring to push the boundaries of

duty of care and vicarious liability.

With so much change in the space

of 12 months, an air of uncertainty is

understandable and many have been left

with more questions than answers. An

important one is whether interested parties

will be able to take stock and gettogrips

with the extremely fastevolving claims

landscape.

2013 a yearof change


4/11


5/11


Those of you with a good memory will

remember reading about the case of

Woodland v Essex County Councilin last

years Liability Roundup (page 6). At that

time, the Court of Appeal had decided

it was inappropriate to extend a local

authoritys nondelegable duty of care. The

claimant appealed to the Supreme Court.

The claim followed a tragic accident when

a school pupil nearly drowned and was left

with severe brain damage. The swimming

pool was run by another local authority and

the lesson was supervised by a teacher and

lifeguard who were employed by a private

company. Essex CC had delegated their

duty of care with regard to the provision

of the swimming lesson, relying upon a

common law duty to take reasonable steps

to ensure the teacher and lifeguard

were competent.

Reversing the Court of Appeal decision,

the Supreme Court unanimously held that

Essex CC was liable for the negligence of

an independent contractor, without fault

on its part. The court prescribed limited

circumstances where a nondelegable duty

of care may arise, but the decision stems

from the authoritys acceptance of the

pupil into its care to teach and supervise.

Swimming lessons were an integral part

of the schools teaching function and their

control of the Claimant.

In an effort to limit the duty, the Supreme

Court did say that schools will not be liable

for the negligence of third parties carrying

out extracurricular activities, where the

school has not assumed responsibility for

those activities.

Worryingly, by extending the non

delegable duty of care, the court may

have opened other avenues for claimants

to pursue. What is clear from this decision

is that the Supreme Court may be

persuaded to overturn previous case law,

where a claimant risks being left without

compensation due to negligence of an

uninsured third party.

In Woodland,she was forced to sue the

local authority due to inadequate insurance

provisions of the third party independent

contractors. This case serves as a useful

reminder that all private contractors must

have an insurance policy that contains an

adequate limit of indemnity, and they agree

to a binding contractual indemnity in the

event of negligent acts or omissions.

Liability


6/11


In three similar cases, Cockbill v Riley,

Risk v Rose Bruford College and Uren

v Ministry of Defence and others,the

claimants tragically suffered the most

severe injuries and as with Woodland the

importance of establishing a duty of care

was fundamental. Each accident involved

the claimants jumping into a paddling pool

the irst in a private domestic scenario, the

second at a drama school events day and

the third at a charity Its a Knockout.

Mr Riley was holding a party for his

daughter and her friends following the

completion of their GCSE exams. A limited

amount of alcohol was allowed and one of

the friends had brought a shallow paddling

pool for the garden. Mr Riley had insisted

it was situated away from some steps to

avoid diving.

Tragically, Mr Cockbill decided to bellylop

into the pool, but got his angle wrong and

dived in head irst, suffering a broken neck.His case was that there was a foreseeable

risk of signiicant injury and that Mr Riley

should have carried out a risk assessment.

The court disagreed and conirmed Mr

Rileys duty of care was limited to keeping

an eye on behaviour and intervening in

a reasonable manner where necessary.

There was no evidence that there was a

foreseeable risk of signiicant injury and Mr

Riley was not required to tell guests not to

run or jump into the pool.

The second claim followed Mr Risk jumping

into a small inlatable pool headirst,

leaving him tetraplegic. He had been

attending a day of events at the defendants

drama school. Mr Risks case was that

the college owned him a duty of care to

take appropriate steps to prevent him

from injuring himself, to make a suitable

risk assessment and to provide proper

supervision.

The court disagreed and decided that the

college did not owe the claimant more than

a general duty of care under section 2 of

the Occupiers Liability Act 1957. Mr Risk

was of full age, did not lack mental capacityand was not required to dive into the pool.

An occupier would only owe an additional

duty to protect against obvious risks or

selfinlicted harm where a person had no

genuine and informed choice or lacked

mental capacity.

The claimant had created an obvious and

serious risk by acting in the manner he

did. Knowledge of a potential risk was only

relevant in terms of breach, and in this case,

the court found that the defendant had not

assumed responsibility for the matters that

remained within the claimants personalsphere as they had not carried out any

proper risk assessments and had not put in

place any control measures. Judgment was

therefore, in favour of the defendant.

Finally, Mr Uren was competing at a charity

day, in an event which involved retrieving

plastic fruit from a shallow paddling pool.

Approximately half the participants chose

to enter head irst. Mr Uren attempted the

same, only to catch his feet on the side

and hit his head on the bottom, suffering

catastrophic injuries.

The court concluded that any proper

appraisal of the activity would have

revealed a risk of serious injury. The task

being undertaken, the presence of water

and height of the side of the pool, meant

competitors heads would be moving

downwards on entry. On the balance

of probabilities, if head irst entry had

been prohibited, the accident and injury

would have been avoided. The claimant

succeeded in establishing the negligence

was causative of his injury.

It is important to remember that each case

will be decided on its facts, but on readingthese cases, some occupiers may be left

uncertain as to their duties. Those who

voluntarily take a risk will not usually be

compensated, but where occupiers are

arranging events, it would sensible for them

to think about the safety rules beforehand.

An interesting case north of the border

involved a golfer who lost the sight in one

eye, after he was struck by a fellow players

errant ball. In Phee v Gordon & Niddry

Castle Golf Club,the unfortunate Mr Phee

sued the other golfer and the club, alleging

negligence on the part of the golfer andfailure of the club to erect appropriate signs

to safeguard golfers safety.

The appeal court in Scotland decided

both defendants were liable, with the golf

club bearing 80% and Mr Gordon 20%.

The court considered the course layout,

the safety practices and the absence of

any warning signs. The failure to warn by

signage meant the club must bear the

greater share of liability. Mr Phee recovered

damages of 400,000. The criticisms

from the court should be considered by all

sporting venues.


7/11


2013 saw a number of developments

concerning mesothelioma claims. Whilst

these claims were exempted from LordJacksons reforms so that claimants

would continue to recover success fees and

ATE premiums, as well as the 10% general

damages uplift the government have

shown a willingness to plug the gaps.

To tackle the problem of victims being left

without compensation, the government

announced the Mesothelioma Bill, which

awaits Royal Assent. Claimants who cannot

trace their employer, or the insurer, will

be able to pursue a claim via the Diffuse

Mesothelioma Payments Scheme and

will recover 75% of the average payout.The Scheme is being funded by insurers

contributing 3% of their premiums.

More positive action has seen the

government align these claims with

other personal injury claims and remove

the recovery of success fees and ATE

premiums from July 2014. Despite

opposition from claimant lawyers, there

was no sustainable argument to support a

continued exemption. This action should

help to reduce the disproportionate and

excessive costs seen from many irms.

Disappointingly, the inal announcement

saw the abandonment of a proposed

Mesothelioma PreAction Protocol. The

hope was to create a speciicallytailored

protocol, which would streamline the

claims process and result in less litigation.

Objections from claimant lawyers forced

the government to scrap the proposal

and the ixed costs that would have come

with it, but now under consideration is an

electronic case management system.

Mesothelioma


8/11


QBE enjoyed successful contempt of

court proceedings in the case ofAirbus

Operations Ltd v Roberts. Mr Robertshad claimed more than 500,000 in

damages from his employer, Airbus. He

said he was left severely disabled following

a straightforward slipping accident, he was

unable to work and required extensive care.

Surveillance evidence showed Mr Roberts

renovating a house without any sign of

physical diiculty to the contrary, he

was seen lifting a bath and other heavy

items. For the majority of the footage, he

was seen to be smiling, laughing, whistling

and even skipping, whilst he worked. Mr

Roberts reported no miraculous recoveryand when faced with such fraudulent

dishonestly, the court was left with no

option than to sentence him to six months

at her majestys pleasure.

Hot on the heels of Robertscame the

contempt proceedings in Homes for

Haringey v Fari. The claim in excess of

750,000 had been struckout the

claimant had suffered no more than a

minor injury, with damages equivalent

to 0.5% of her pleaded case. The court

concluded that Mrs Fari was well aware of

the content and purpose of her evidence,and schedule of loss, and there had been a

serious and deliberate attempt

to mislead.

In an attempt to send out a clear message

to fraudsters, the judge said that those who

made false claims should expect to go to

prison. Having regard to the seriousness of

her conduct, the court sentenced Mrs Fari

to three months in prison.

Finally came the decision in Plana v First

Capital East Ltd.The claim followed

a workplace accident in 2007, with MrPlana alleging traumatic brain injury and

submitting a schedule of loss totalling 3m.

He claimed to require virtually constant

care and supervision, with almost

daily blackouts.

Again, surveillance evidence was obtained

and showed Mr Plana working at a car

wash, without diiculty. First Capital

successfully applied to strikeout the claim

as Mr Planas conduct was a clear abuse of

the court process, was likely to obstruct the

just disposal of the claim and therefore he

had forfeited his right to pursue the case.

The case has now been submitted to the

High Court for contempt proceedings.

Fraud


9/11


Scotland

With those northoftheborder not

wanting to feel left out, a number of

Scottish government consultations led to

the Taylor Review Report, Courts Reform

Bill and the Damages Bill.

Sheriff Principal Taylor reviewed funding

and expenses of civil litigation in Scotland,

with the aim of deciding how best to

improve access to justice, but also with

regard to the recoverability and predictably

of expenses. He recommended theextension of DBAs, the introduction of

QOCS, the recovery of expenses on an

hourly rate basis and increased court

management of expenses. The report is

with Scottish Ministers for consideration.

The Courts Reform Bill details Lord Gills

review of the Scottish justice system,

with the aim of reducing delays and

expenses for court users. The main

recommendations are: raising the limit

in the sheriff court to 150,000, creating

a new Sheriff Appeal Court, creating a

specialist personal injury court, improving

and modernising the Court of Session and

promoting Alternative Dispute Resolution.

Again, the Bill will be debated by parliament

and with approval it could be enacted by

December 2014.

The inal announcement concerned

the Damages Bill. This followed a recent

consultation on personal injury claims and

the civil law of damages. It is understood

that the Bill is one of the legislative priorities

of 2014 and intends to increase the limitation

period from 3 to 5 years and to provide the

courts with the power to impose periodical

payment orders. Such an increase is likely to

prolong claim lifecycles, act as a disincentive

to prepare a claim in a timely fashion and

increase solicitors costs. Whilst the power

to order periodical payments is sensible for

high value claims, it is hoped that Ministers

will see sense and drop the proposal to

increase the limitation period.


10/11


A ripple effect from the signiicant changes

of 2013 is inevitable the intended and

some unintended consequences will be

felt by all stakeholders involved in liability

claims. With the stakes so high, we can

expect new and innovative strategies and

tactics to be employed by claimant irms

who are ighting for their lives. Avoiding

portal costs will be a priority.

The government has recently made some

bold promises on tackling whiplash claimsand has already slashed solicitors costs.

The effect may be twofold: irstly, claimant

lawyers will have to explore other revenue

avenues and secondly, fraudsters will target

less wellprotected areas. The lucrative

area of noiseinduced hearing loss has

seen a signiicant spike in claims. This looks

set to continue, and whilst repudiation

rates are high, the sheer volume of claims

presents signiicant challenges. A new

battleground is forming.

Something which is back with the

government is the review of the discount

rate, which is used to calculate future loss

claims. The rate which has been static at

2.5% since 2001 has been the subject ofgovernment consultation, with a recently

published Ministry of Justice report hinting

at a decrease. Any decrease could add

hundreds of millions to the aggregated

compensation bill of the UK even a

reduction of 1% could add millions of

pounds to the value of the largest claims.

Set against increasing costs for continuingcare and prosthetics, catastrophic injury

claims inlation continues to spiral upwards.

The government has thus far given no

indication of when a discount rate decision

will be made.

As we have seen in Woodland, and other

cases, the courts are being repeatedly

asked to revisit and consider where a duty

of care may apply. It is reasonably safe to

assume we can expect to see this trend

continue into areas such as education and

abuse claims.

That said, it is not all doomandgloom

the Jackson and MoJ reforms present

a number of clear opportunities which

should be grasped with both hands. Those

insurers who can come to terms with, and

embrace the reforms, should be able to see

a bright future on the horizon.

Whats on thehorizon


11/11

QBE European Operations Plantation Place 30 Fenchurch Street London EC3M 3BD

tel +44 (0)20 7105 4000 www.QBEeurope.com

4787/LiabilityRoundUp2013

QBE European Operations is a trading name of QBE Insurance (Europe) Limited and QBE Underwriting Limited, both of which are authorised

by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

DisclaimerThis publication has been produced by

QBE European Operations, a trading name

of QBE Insurance (Europe) Ltd (QIEL).

QIEL is a company member of the QBE

Insurance Group (QBE 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 legaladvice. This publication does not purport

to provide a deinitive statement of the law

and is not intended to replace, nor may it

be relied upon as a substitute for, speciic

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 anyduty 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.

Author

Tim Hayward

Tim joined the insurance industry in 1997,

working in motor, and then liability claims,for a major UK insurer. He specialised

in insurance claims litigation, studying

part-time for 4 years, before qualifying as

a Solicitor in 2011.

Working within QBE EO Technical Claims,

Tim deals with high value and complex

UK casualty claims, as well as providing

technical advice internally and to key

stakeholders. Tim is the author of the

monthly QBE publication, Technical

Claims Brief.

QBE Liability Roundup

Documents