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June 2012 – edition 12 Stress > Claims handling > Risk > Discrimination >> Stay close to the litigation reforms and defendants will reap the benefits Ê Â
June 2012 – edition 12
Stress > Claims handling > Risk > Discrimination >>
Stay close to thelitigation reformsand defendants willreap the benefits
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This edition of The authority is published during the distraction, formany, of a busy summer of sporting events. Whilst it is fair to say thatexpectations are mixed for the English football team, we all hope thatthe Olympics and Paralympics will help install a renewed sense ofnational optimism well beyond the sporting venues.
Whilst reflecting on the challenges faced by the public sector, this issuelooks forward to the long awaited implementation of the Jacksonreforms; few defendants will mourn the payment of exorbitant litigationcosts or success fees. The uncertainties are covered by Alistair Kinley,particularly in relation to recovery of defendant’s costs.
With the reforms in mind the message is quite clear: stay close to thelitigation reforms and defendants will reap the benefits.
This edition reflects the fact that the public sector is experiencing newand varied claims. Orla Scanlan considers the fascinating case ofWoodland and its efforts to expand the scope of liability for localauthorities to include activities conducted by independent contractors.Whilst the defendant narrowly prevailed in the Court of Appeal, manylocal authorities will wait anxiously as the Supreme Court reconsidersthat decision given its wide ranging implications.
It has also been a mixed year for highway authorities as debate ragesover what should be classed as a dangerous defect and the extent towhich highway authorities are required to assess and record risk. Thisedition reviews the court’s approach to recent cases.
Finally, this year has seen the welcome end to the EL Trigger Litigation.Henry Bermingham takes stock of the outcome and considers whetherthere could yet be a sting in the tail.
As ever, The authority welcomes feedback on this edition and anytopics to consider for future editions.
Paul TarnePartner
Welcome to the 12 editionof The authority
Page 2 - New challenges for claims handling post Jackson?
Page 4 - EL Trigger: fall out?
Page 5 - Stress testing
Page 7 - No smoke without fire?
Page 9 - Counting the cost of age discrimination
Page 10 - Spotlight on stress
Page 11 - Your best defence
Page 13 - Emergency ahead! Works in progress
Page 15 - When is a duty not a duty?
Page 16 - Taking ‘mental’ out of environmental risk
Page 18 - So you think you are covered?
Page 19 - A trip too far
Page 20 - Council (un)stuck in a rut
Editorial
Contents
Berrymans Lace Mawer page 1
New challengesfor claimshandling postJackson?
Lord Justice Jackson began his reviewof civil litigation costs back inNovember 2008. Some four and ahalf years later, in about April 2013,his principal recommendations aimedat dealing with disproportionate costswill come into effect. The coalitiongovernment adopted his report andwill implement many of his proposalsvia the Legal Aid, Sentencing andPunishment of Offenders (LASPO) Act2012. Other measures will be brought
about at the same time via change tothe Civil Procedure Rules (CPR).
The reforms are designed to savelitigation costs whilst preservingaccess to justice. Will these aims berealised when the measures bite nextApril? This article examines what thelikely effects of the changes might beon costs and on claims-relatedbehaviours.
An end to recoverability
The cornerstone of Jackson reforms,and of part 2 of the LASPO Act, is theending of the recoverability ofadditional costs liabilities. In plainerlanguage, success-fee uplifts in ‘nowin, no fee’ claims will no longer be
paid by losing defendants and theywill no longer pay premiums forclaimants’ after-the-event (ATE) legalexpenses insurance policies.
If claimant lawyers continue to chargeuplifts, then claimants will pay thesethemselves, probably out of damagesrecovered. Claimants are to receivean additional 10% increase ongeneral damages to provide somefunds for this purpose. This is one ofJackson LJ’s ‘interlocking reforms’and it is proposed that the increase ingeneral damages will be broughtabout by non-legislative means.
The current costs rule is that the losergenerally pays both sides’ costs: atwo-way costs shift. Both Jackson LJand the government believe that if therule changes to one-way costs shifting– in favour of successful claimantsonly – then ATE insurance will nolonger be required because there willgenerally be no adverse costs liabilityagainst which the ATE policy wouldoffer protection. It is, however,recognised that there needs to besome exceptions or qualifications toone-way costs shifting, in particular sothat effective offers to settle can bemade and so that parties’ conductcan be taken into account whenconsidering costs issues. Hence theregime is to be qualified one-waycosts shifting, known as QOCS. This is to be introduced in CPR.
Changes to handling low value injuryclaims
The government is also seeking toextend the current scheme for lowvalue motor injury claims toemployers’ and to public liabilitycases. The scheme is widely regardedas having been successful since itsintroduction in April 2010, althoughdetailed statistics and analysis haveyet to be released. CompensationRecovery Unit figures confirm thatover a million and a half motor injuryclaims have been notified since April2010, the vast majority of which willhave at least started in the scheme.Extending the scheme is not formally
page 2 Berrymans Lace Mawer
part of ‘Jackson’, because his finalreport pre-dated its introduction.Nevertheless, he observed that:
the new process, contrary to theoriginal intention, does notembrace all categories ofpersonal injury claims, inparticular employers’ liability andpublic liability claims.
Given this, it seems reasonable tosuggest that he would supportextension as is now proposed.
Although the detail of any extendedscheme is not yet known, it willalmost certainly feature electronicnotification of claims, limited periodsfor compensators to make decisionssuch as admitting liability, and fixedlegal costs at its various stages.
Meeting the challenges
There is much of benefit forcompensators – whether public orprivate sector – in the reformsoutlined above. The ending ofrecoverability should, at a stroke,remove significant expenses (success-fee uplifts and ATE premiums) fromspend on legal costs. Extending thelow-value motor scheme to EL and PL(employers’ and public liability)should see fixed costs in those casesset at realistic levels. Even in motorcases, the present fixed costs shouldbe cut: the LASPO Act bans thepayment of referral fees, and thegovernment has said it will reducefixed costs to reflect that.
With these opportunities come, asever, new challenges. The obviousdownside to QOCS is that successfuldefendants will have to foregorecovery of their costs. This is anintegral part of QOCS, which itself isthe quid pro quo for ending ATErecoverability. That said, foregoingrecovery of defence costs may not sitespecially easily with localgovernment bodies put to expense indefending claims against them.There is also some concern that
QOCS could lead to greaternumbers of speculative claims againstlocal government in particular. ATEpremiums will not be recoverable sothere will be no ATE insurer filteringclaims in advance. The key to thisconcern will be how the qualifications(the Q of QOCS) operate in practice.One possible solution could be thatQOCS protection is lost – meaningthe successful defence may recovercosts – in the case of speculativeclaims. A test could perhaps be basedon CPR 3.4, which refers to ‘… noreasonable grounds for bringing ordefending the claim’.
Dealing with low-value EL and PLclaims in an extended or adaptedmotor process will give rise to otherconcerns.
First, what will be the periods foradmitting liability, and therebykeeping the claim in the process? Willthese be different for EL and PL? Tooshort and compensators will either notbe able realistically to comply or willhave to secure new resources toensure compliance. The liabilitydecision really is the key stage,because if the claim exits the processhere then the benefits of staged fixedcosts and quicker life cycles are lost.
Second, how will the process dealwith issues such as contributorynegligence and causation? These willbe raised more often in EL and PLclaims than might be the case withmotor claims, in which any allegationof contribution (other than theconventional seat-belt discounts)causes the claim to leave the process.
Third, what will be the levels of costsin the process and will there be a‘safety net’ between those and hourlyrates? This is important, since ifexiting the process causes a claim toattract unrestricted hourly rates ofcosts then there would be a strongeconomic incentive for claimants totry to pull cases out of the process atthe earliest opportunity and/or fortechnical reasons. It is probably worthnoting that in motor cases this ‘safety
net’ is provided by what is oftencalled the ‘predictable costs regime’of CPR 45.II, but no equivalent ofthat exists in EL and PL claims.
Final thoughts
The Jackson reforms and changes tothe claims process are set forimplementation next April. There ismuch of benefit in these measures butsome fine detail needs to be providedbefore the precise impacts of changemay be judged.
Changes, such as these, to costs rulesand regimes will change the rewardsavailable for claimants and theirlawyers and will hence change theirbehaviours. The tactics andeconomics of defending cases undera QOCS regime will be different tocurrent approaches.
While it is expected that somelitigation will test the boundaries ofthe reforms, the authors offer thehope that this will be fairly limited andshort lived. It would be beyond ironyif the Jackson reforms, aimed attackling ‘disproportionate costs’, werethemselves either to add to the costsof resolving claims or were tobecome the subject of the sort oftactical and technical litigation whichbedevilled the previous round ofreforms and which became known as‘the costs war’.
Christopher CoughlinPartner
Alistair KinleyHead of policy development
PS. The issues raised in this article havebeen addressed in detail by the authorsand well received, in separatepresentations to the Yorkshire and Tyne &Wear Insurance Officers Groups.
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Berrymans Lace Mawer page 3
EL Trigger: fallout?
In March 2012, the Supreme Courtbrought an end to MMI’s attempt toavoid liability for mesotheliomacaused by historic asbestos exposure.The decision marks a victory for localgovernment and mesotheliomavictims.
The justices held that the MMI EL(employers’ liability) policy respondsto mesothelioma claims if theclaimant was exposed to asbestosduring the currency of the policy. Thisis an endorsement of the historical‘causation’ approach to policyinterpretation.
Background
n Bolton v MMI (2006)was thestart. It was a public liability (PL)case in which the court held thatin a mesothelioma claim injury‘occurs’ when the tumour startedto develop – ten years beforemanifestation of symptoms.
n MMI’s EL policy was worded in asimilar way to the Bolton PLpolicy. It responded if the injurywas ‘sustained’ or ‘contracted’during the term of the policy.Accordingly, from May 2005MMI began to decline ELmesothelioma claims.
n Prior to 2006, MMI hadoperated its EL policies on theso-called causation basis. Thatmeant the policy would respondif the victim was exposed toasbestos during the currency ofthe policy. This approach wasapplied across the market,irrespective of how individual ELpolicies were worded.
n Adoption of this new ‘Boltonite’approach had the effect ofshifting responsibility formesothelioma from MMI to localgovernment.
n Ten local authorities becameinvolved in the EL TriggerLitigation. All aimed to ensurepayment of mesothelioma claimsby MMI.
The Supreme Court judgment
The court was eager to emphasisethat it should:
avoid overconcentration on themeaning of single words andphrases viewed in isolation andlook at the insurance contractsmore broadly.
Adopting that approach the judgeswere satisfied that the MMI EL policiesshould respond on a causation basisbecause of the following:
n They required employment andinjury to happen concurrently.
n Concurrence would create ananomaly if an employee wasexposed to asbestos in year onebut by the time the effectsmanifested themselves he was nolonger employed by thepolicyholder.
n There was a link between thenumber of employees in eachperiod of insurance and thepremium.
n If MMI decided not to renew thepolicy (beyond the localauthority’s control), cover forhistorical liabilities woulddisappear.
n Policies containing territorialexclusions would excludeemployees who happened to beworking abroad when thecondition arose.
Accordingly, the court concluded thatthe policy which should respond wasthe one in force at the time ofexposure.
Unfinished business
For local government, the issue isnow clear – MMI is responsible for ELmesothelioma claims. However, in theaftermath of the Supreme Courtjudgment, a number of mattersremain outstanding:
A PL claims. Bolton was notoverruled. The insurerresponsible for a PLmesothelioma claim is the onewho was on risk when themesothelioma ‘occurs’. On themedical evidence available inBolton, that was ten years beforethe symptoms became manifest.In ‘trigger’, new medicalevidence was considered. Thetrial judge concluded that theoccurrence date was five yearsbefore symptoms. This pointremains unresolved and leavesopen which policy should applyto a PL mesothelioma claim.
B Limitation. MMI began to rejectEL mesothelioma claims in May2005. Following the HighCourt’s judgment in ‘trigger’(November 2008), MMI beganto pay these claims again ‘underprotest’. For the localgovernment, this means thatthere is a cohort ofmesothelioma claims settledbetween May 2005 andNovember 2008 which remainunpaid. Limitation on aninsurance policy runs fromsettlement of the claimant’sclaim. As at June 2012, all casessettled before June 2006 arenow limitation barred. Thoseauthorities who settled claimsbefore November 2008 need tourgently review their files andsubmit claims to MMI.
C MMI solvency. Since 1993, MMIhas been going through asolvent ‘run-off’ of its liabilities. Ithas always been anticipated thatMMI would have sufficient fundsto deal with liabilities on thisbasis. In the eventuality that MMI
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ran out of money, a scheme ofarrangement was put in place.Following its defeat in the ELTrigger Litigation, there is agreater probability that MMI maynot be able to meet its liabilitiesgoing forward. If MMI reaches apoint at which solvent run-off isno longer possible, then thescheme of arrangement will betriggered. That could mean a‘claw back’ of sums paid out byMMI to members in settlement ofclaims since 1993. Bluntly, localgovernment could suffer a verylarge bill.
Comment
No one foresaw the disaster that isasbestos. This issue will continue to
burden both the local governmentand MMI well after the anticipatedpeak in mesothelioma claims in 2015.
The use of asbestos by localgovernment was not as extensive asin private sector engineeringconcerns. Hopefully, now that clarityhas been restored to the EL policiesMMI will have funds to deal with theclaims that are now due. That said, anumber of local authorities are nowmaintaining a separate asbestosreserve. Whether an authority needsto do so depends on whether therewas significant use of asbestos by theauthority and a historic asbestosclaims profile.
Henry BerminghamPartner
Stress testing Hatton and Sutherland ten years on
This is the first of two articles in thisedition of the Authority concerningstress at work. This article looks at thedevelopments in workplace stressclaims; the second looks morespecifically at bullying/harassmentand the Protection from HarassmentAct, 1997.
Stress is particularly topical withregards to the public sector since thethree most vulnerable occupationsare said to be teaching, social workand public sector work generally; theresearch identifying these occupations
Berrymans Lace Mawer page 5
pre-dates the credit crunch andausterity cuts.
What is stress? The HSE says it is:
the adverse reaction peoplehave to excessive pressure orother types of demands placedon them.
The key here is the adverse nature ofthe reaction – not necessarily thepressure exerted.
More significantly, ‘stress’ is not byitself sufficient to form the basis of aclaim. The stress must result in arecognised medical condition –usually psychological but alsopossibly physical (from palpitations toa heart attack).
The basic principles of tort apply tosuch claims. A claimant mustestablish a duty of care, a breach ofthat duty and foreseeable risk ofinjury, along with causation in respectof any injury.
Experience shows that there arecertain trends which emerge from‘traditional’ common law stress casesas certain types of situation crop upagain and again as precipitating orcausal factors. Examples include:
n Excessive workload – due topoor management, pressure onresources or high staff turnover.
n Over-promotion.
n Target-driven goal setting.
n Insufficient training.
n Organisational change.
n Role and reporting line ambiguity.
n Inter-personal issues, usuallybetween direct line managementlinks.
Essentially a claimant must show thathis/her employer knew or shouldhave known that he was at risk ofsuffering psychiatric injury, either from
previous absences or as a result ofcomplaints made. This must be morethan simple employee grumbles andmust be enough to put a reasonableemployer on notice that they shouldact. The claimant must go on to showthat in light of this knowledge, theemployer failed to take reasonablesteps to prevent the harm occurring.This could include reducing anemployee’s workload or removingthem from working with an allegedbully.
The need for injury to be foreseeableis highlighted in the judgment inGarrett v Camden LBC (2001) CA:
Unless … there was a real riskof breakdown which theclaimant’s employers oughtreasonably to have foreseenand they ought properly tohave averted there can be noliability.
Although stated in the negative, thetwo steps to the test are clear: theemployer must:
1 be on notice of likely injury, and
2 have failed to take appropriateaction to deal with this.
The first case of its kind, Walker vNorthumberland CC (1994) clearlyillustrates this point. The claimant wasa social worker in charge of a teamwhose workload involved handlingchild abuse cases. He reported stressto the council and when nothing wasdone about this he suffered a nervousbreakdown. On his return to workinsufficient action was taken toprotect him from further excessivestress despite complaints and hesuffered a second breakdown. Therewas no liability for the first one as theemployer was not on notice. On thesecond occasion when nothing hadbeen done in between ‘to alleviatethe stress’ (the court’s words), when itcould and should have been done,liability flowed to the council.As further examples – in 2005 the CAdecided two ‘pub’ cases.
1 Hone v Six Continents Retail Ltd,2005, CA
The claimant took overmanagement of The Moathouse,Luton. He was working 90 hoursa week and asked for anassistant. He did not get anassistant, two workers left and hewas doing even more work –with no breaks. He asked againfor an assistant – again this wasrefused.
The area manager visited whenthe claimant would not sign theworking time directive waiver.The situation was known to themanager but despite promises,nothing changed.
The claimant broke down, wentoff sick and sued for stress – andwon.
1 Harding v Pub Estates Co Ltd,2005, CA
The claimant took over TheAntelope, one of the toughestpubs in Manchester. Criminalactivity was rife within the puband the area. The stresses andstrains for the claimant wereenormous and he had a heartattack.
However, despite hisprotestations, the evidenceshowed that he had not informed his GP or employer ofthe effect the stress was havingon his health.
Since the employer was nottherefore on notice, the claimfailed.
Hatton v Sutherland (2002) CA
The Court of Appeal heard four casestogether and it set down 16propositions which have becomesomething of a checklist when lookingto pursue or defend such claims.These are viewed as ‘setting the barvery high’ for workplace stress claims.
page 6 Berrymans Lace Mawer
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Hatton ten years on
Incredibly, there was a set backalmost immediately. One of the fourcases heard, Barber v Somerset,appealed to the HL and won! The HLapproved of the 16 propositions butnot the ‘height of the bar’ in thisparticular teacher stress case.
Even so, Hatton has remained goodlaw to this day, save for oneexception (see below).
Mullen v Accenture Services (2010) isa clear reminder of how high the barstill is. Mr Mullen, a top-levelcomputer programmer, joined thefirm in 2004. He was contracted to,inter alia, the Williams F1 Team, thenhe worked in Leeds on a complexproject for the ambulance service. Itwas whilst involved in this project thathe claimed he was made ill as he wasbullied and also overworked by hisline manager. He gave evidence oflong hours, forgetfulness, lack oflunch breaks and bursting into tears –and suggested that these should putthe employer on notice of hisimpending mental breakdown.
Not enough, said the court.Furthermore, the fact that he had ahistory of psychiatric illness had nobearing because he had not told hisemployer until after this breakdown.The employer was not on notice. Thecase was dismissed.
More recently, by far the biggestpublic sector case has been EricaConnor v Surrey CC (2010) CA. Theclaimant head teacher succeededagainst the local authority employerwhen political correctness (andaccusations of Islamaphobia) got inthe way of the duty of care to theemployee. The settlement figure wasjust short of £400,000.
The counselling shield:
Proposition 11 of Hatton says:
An employer who offers aconfidential advice service with
referral to appropriatecounselling or treatmentservices, is unlikely to be foundin breach of duty.
This survived until 2007, when the CAwas asked to accept it as a fulldefence against a claim.
Daw v Intel (2007) CA
there will be cases in which anemployee may be expected totake refuge in counsellingservices … but … the reference… in Hatton does not makesuch services a panacea (inorder to) discharge their duty ofcare.
Because of the attempted use ofproposition 11 as a defence oncemore, the status of the Hattonprinciples as a whole wasunceremoniously pegged back a yearlater by Smith LJ: Dickens v O2 plc(2008) (on counselling):
the reliance on Hale LJ’s summary in Hatton … serves to demonstrate how dangerous it is to apply guidance given by the court as though it were a statutory provision.
Conclusion
Notwithstanding all of the above, thedifficulty for claimants to establish asuccessful case of stress at workremains, with the bar still set high.Such cases should therefore bedefended robustly.
However, see page 10 whereby thematter of harassment in theworkplace brings a distinctly moreworrying trend to the developing case law.
Roy WoollardPartner and former head teacher
No smoke withoutfire?
In recent times we have seen anincrease in the public scrutiny facedby organisations that breach healthand safety legislation and as a resultcause serious injury to, or the deathof, an employee or member of thepublic. Interestingly, what we havealso seen even more recently is theincrease in the public scrutiny facedby individuals within thoseorganisations. According to unofficialfigures released by the Health andSafety Executive (HSE) in response toa Freedom of Information Act request,the number of directors and seniormanagers prosecuted under theHealth and Safety at Work etc Act1974 has increased by more than400% in the last five years. Whilst theHSE cautions that the figure may notbe completely accurate as it has notbeen validated and released as partof its official figures, what cannot bedisputed is that individuals are undergreater scrutiny and those workingwithin the public sector are equally atrisk. The Atherstone-on-Stourprosecutions highlight this positionquite clearly.
Background
The case concerned a blaze in avegetable packing warehouse inWarwickshire in 2007 which led tothe tragic deaths of four firefighters:Ashley Stephens, Darren Yates-Badley,John Averis and Ian Reid. Theinvestigation found that the probablecause of the blaze was a nakedflame. Whilst individuals at thevegetable packing plant wereinterviewed, no arson charges wereever brought. Instead, following athree-year (£4.5 million) investigation,the Crown Prosecution Service,assisted by the HSE, charged threeindividuals (a service manager andtwo incident commanders) with grossnegligence manslaughter in additionto charging the fire authority withbreaches of the health and safety
Berrymans Lace Mawer page 7
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legislation. The case against the fireauthority is yet to be dealt with;however, earlier in June 2012 theincident commanders – watchmanager Adrian Ashley and stationmanager Timothy Woodward – wereacquitted. Watch manager PaulSimmons was acquitted part-waythrough the trial following a directionto the jury to do so by the trial judgeon the basis that he had no case to answer.
Despite the prosecution alleging thatthe individuals were criminallyresponsible for the deaths of the four-man breathing apparatus crew, thejury disagreed and found, after onlyseven hours of deliberation, that theremaining two defendants had notacted illegally during their commandof the incident on that tragic eveningin November 2007. In the end justiceprevailed but only after a gruellingsix-week trial and more than fouryears of investigation by the police.
There has been wide criticism fromWarwickshire’s Chief Fire Officer(CFO), as well as the Chief FireOfficers’ Association (CFOA), of theway the investigation was handled.
This is especially true following theconclusion of the case with manycommenting that the individualsshould never have been prosecuted. Itis understood that Warwickshire’sCFO and CFOA are asking theJustice Secretary to commence aformal investigation into why the threefire officers were prosecuted.
What the case clearly illustrates is thatpublic sector employees, in this casefire officers, are not exempt from thethreat of prosecution. The CFOsummed up the position at conclusionvery clearly when he stated that:
The police investigation into thisfire took a wrong turn very earlyon. The police treated decent fireofficers like common criminals …they were locked up in cellsovernight and even had theirshoelaces taken away fromthem.
It is hoped that the example does notthrow up wider issues concerningcritical decisions that firefighters makeas they attend a fire. It may beinevitable that the fear of prosecutionmay affect a firefighter’s ability to do
his job. What is clear is that afirefighter will not be given anyspecial dispensation despite thechaotic nature of the scenes theyattend and the difficult decisions theyhave to make upon attendance atpremises. In fact the Warwickshirecase perhaps highlights that they areheld to a higher level of scrutiny; thisties in with the trend towards moreprosecutions of individuals.
The case is one of a few involving fireservices that has been in the press.Earlier in 2012 saw the intense mediascrutiny of Hampshire Fire & RescueService following the death of amember of the public who haddrowned in a public pond, and thesubsequent inquest. Whilst it emergedthat the individual had likely beendead for a while when the fireappliances arrived at the scene, theindividual officers making keydecisions about the body retrievalwere scrutinised during the questioningthey faced at the two-day inquest.
Summary
What those prosecuting need to beclear on is that whilst there may be an
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page 8 Berrymans Lace Mawer
appetite for individual prosecutions,this cannot be done at the expense ofpublic safety. Fire services need to beable to conduct their duties withoutthe threat of unwarrantedprosecutions.
Atiyah MalikPartner
Counting the costof agediscrimination
There has been much focus on thequestion of whether employers canlegitimately retire employees at theage of 65 now that the statutorydefault retirement age of 65 has beenabolished. Arguably, of equalimportance, particularly in the publicsector, is the issue of whether if anemployer dismisses an employee at acertain age to avoid expensivepension liabilities accruing, thisamounts to age discrimination.
Given the economic climate and withmany public sector redundanciestaking place, this issue often raises itshead. In the public sector, senioremployees may accrue generouspension entitlement at the age of 50.Often such employees will bedismissed shortly before their 50thbirthday in a round of redundancieseither coincidentally or deliberately toavoid additional expensive pensionliabilities accruing if the employeewas to continue to be employedbeyond that age.
This is what happened in Woodcock vCumbria Primary Care Trust (2012)EWCA Civ 330, and the Court ofAppeal (CA) had to grapple with theissue of whether costs could justifyage discrimination.
Facts
Mr Woodcock’s contract ofemployment contained a 12-monthnotice period. In September 2006, hisposition as chief executive of an NHS
Trust disappeared in a nationalreorganisation and he was informedthat he was at risk of redundancy. In the hope that Mr Woodcock wouldfind alternative employment within theNHS, the Trust delayed giving himnotice of dismissal. Once it becameclear that there were no otherpositions for Mr Woodcock, he wasinvited to a redundancy consultationmeeting in March 2007.
Unfortunately, due to both parties’unavailability, this meeting did nottake place until June 2007. Shortlybefore the meeting, the Trust realisedthat if they gave him 12 months’notice after 17 June 2007, which washis 49th birthday, he would still beemployed on his 50th birthday andthis would result in him being entitledto take early retirement on enhancedterms; this would increase the cost ofhis redundancy by at least £500,000.To avoid this, the Trust gave himnotice of dismissal on 23 May andalso offered to help him try to findsuitable alternative employmentduring his notice period. As a resultof this, Mr Woodcock brought aclaim for age discrimination andunfair dismissal.
Justification
The issue for the CA was whether thisact of direct age discrimination couldbe objectively justified under theEmployment Equality (Age)Regulations 2006 (now re-enacted inthe Equality Act 2010). The Trust’sdefence was based upon thejustification defence contained withinRegulation 3 (now s13 (1) and (2) ofthe Equality Act) which allows anemployer to justify age discriminationif it could establish that thediscriminatory treatment was ‘aproportionate means of achieving alegitimate aim’.
At first instance, the EmploymentTribunal found that Mr Woodcock’sdismissal for redundancy prior toformal consultation in order to avoidthe additional liability that would haveaccrued had he still been employed
at 50, together with the withdrawal ofwhat was effectively a ‘windfall’, wasa legitimate aim which wasproportionate and justified. Onappeal to the EAT, it was held that theTrust had only become liable for theadditional pension costs because ofvarious delays and that it had beenentitled to accelerate the giving ofnotice. Further, when the redundancysituation originally arose, MrWoodcock, if alternative employmenthad not been found, did not have alegitimate expectation that he wouldstill be employed on his 50th birthday.
Costs plus
The CA considered Mr Woodcock’sarguments that to succeed with itsjustification defence, the Trust had toestablish what is referred to as ‘costsplus’, ie, that there must besomething additional over and abovea costs saving. The court agreed thatif the Trust’s actions were solelyaimed at avoiding costs, then thiswould not be a means of achieving a‘legitimate aim’ and the defencewould fail. However, the CA took theview that there was more to theTrust’s actions than simply a costssaving. It held that the real purpose ofthe dismissal was the Trust’s genuinedecision to terminate Mr Woodcock’semployment on the grounds ofredundancy. The fact that the Trustwould continue to incur costs if therewere no dismissal did not prevent thisbeing an entirely legitimate aim.There was nothing wrong with theTrust ensuring that the timing of thedismissal would save the additionalelement of cost that it otherwisewould have incurred; it was legitimateto have this in mind and indeedwould have been irresponsible not tohave done so.
The CA did recognise that there wassome degree of artificiality thatallowed the cost argument to amountto justification if linked to a non-costreason but inadmissible just on itsown. The court recognised that everydecision an employer takes is to someextent likely to involve a costs
Berrymans Lace Mawer page 9
consideration and there was difficultyin that age regulations omitted howfar these considerations should betaken into account in assessingjustification. The ECJ had, however,assisted by giving guidance whicheffectively stated that:
an employer cannot justifydiscriminatory treatment solelybecause the elimination of suchtreatment would involveincreased costs.
Future action
It is important to appreciate that theCA did not give employers ‘carteblanche’ to utilise arguments thatbecause older employees are moreexpensive to employ or that there is aneed to avoid incurring pensionliabilities this justified dismissal. Onecrucial factor in Woodcock was thatMr Woodcock had been treated verygenerously by the trust. It had doneeverything to advise him on hiscareer, had tried to help him secureanother senior role, he had a year’snotice of dismissal in his contract andindeed had been given an additionalten months’ grace.
Notwithstanding this, the burningquestion remains as to whether, inparticular circumstances, a ‘costsonly’ justification is ever acceptable.In Woodcock, the CA felt that thefacts fell into the ‘costs plus’ scenario,ie, cost savings and the prevention ofthe windfall. Bearing in mind theeconomic climate and the continuedrounds of redundancies, there arelikely to be more similar cases in thefuture. Public sector employers wouldbe well advised to ensure that a ‘costsplus’ defence remains in place, ie,some other factor in addition topurely cost savings to successfullydefend such claims. This requirescosts to be in addition to some otherjustification linked to the employers’overall public-service goals.
Andrew McDonaldPartner
Spotlight on stressBullying at work can potentially leadto three main categories of claim:
n A common law stress claim forpsychiatric injury.
n A claim in the EmploymentTribunal under discriminationlegislation or for unfair dismissal.
n A harassment claim under theProtection from Harassment Act1997 (PHA97).
It is the third point that falls under thespotlight in this article, as it representsa new and worrying approach tobehaviour in the workplace. It offersan ever-easier route to litigation forclaimants.
The Protection from Harassment Act,1997
The Act was introduced to preventpeople being ‘stalked’ by giving themrecourse to both the criminal and civilcourts for remedy. It was neverenvisaged as being anything to dowith employment and the behaviourof employees in the workplace untilthe groundbreaking case ofMajrowski went to the House of Lordsin 2006.
In fact, Majrowski had been thrownout at first instance on the groundsthat it did not apply to employmentand the workplace. Sadly, the highercourts did not agree.
S1(i) Prohibits a person from pursuing:
n A course of conduct
n That amounts to harassment
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page 10 Berrymans Lace Mawer
n Which he knows, or ought toknow amounts to harassment.
Contravention gives rise to:
n a criminal offence (s2) and n a civil remedy (s3).
William Majrowski v Guy’s and StThomas’ NHS Trust, 2006, HL
The claimant (M) was employed bythe Trust. He alleged his managerbullied and intimidated him and thatthis was fuelled by homophobia. Aformal complaint was made in April1998. The Trust investigated andfound evidence of bullying. M wasdismissed in June 1998 for unrelatedissues. M did not have sufficientservice to claim unfair dismissal andevents occurred prior to regulationsoutlawing discrimination on groundsof sexual orientation. Therefore thePHA97 was his only course of action.
The House of Lords stated:
An employer could bevicariously liable in damagesunder the Protection fromHarassment Act 1997 s3 for acourse of conduct by one of itsemployees that amounted toharassment in breach of s1 ofthat Act.
Unlike in respect of a workplacestress claim at common law, aclaimant under PHA97 does not needto show recognised psychiatric harm(‘anxiety’ is sufficient); or to put hisemployer on notice that he is likely tosuffer from harm. He has six years inwhich to bring his claim. To besuccessful under the Act he need onlyprove:
A a course of conduct (two ormore times) of
B harassment (not defined).
Once he has proved these, there isno defence for the employer.However, Nicholls LJ set the bar forthe harassment to engage the Act at
a very high level indeed.
To cross the boundary from theregrettable to theunacceptable, the gravity of themisconduct must be of anorder which would sustaincriminal liability under s2.
This was echoed in Conn vSunderland City Council, 2007 CA.In Conn, it was held on appeal thatwhilst the second incident threateningthe claimant with physical violencewas harassment, the first incident wasnot as the perpetrator had threatenedto smash a window. To meet thecriteria of harassment, the conducthad to be directed at the claimant. Itwas also not serious enough:
While the incident wasunpleasant it fell below the lineof conduct that justified acriminal sanction and could notamount to harassment.
The standard has been slipping eversince. In Veakins v Kier Islington(2009) CA, a test of sorts wasintroduced:
The primary focus was onwhether the conductcomplained of was oppressiveand unacceptable, albeit thecourt had to keep in mind thatthe conduct was of an orderthat would sustain criminalliability.
In Rayment v MoD (2010), albeit afirst instance decision, the judgeapplied the ‘oppressive andunacceptable’ test without mention ofthe requirement for the conduct to beof a criminal level.
These two cases cause some concernas they appear to represent arelaxation of one of the two hurdleswhich the claimant must overcome.The other hurdle seems to be underattack, too.
In Iqbal v Dean Manson Solicitors
(2011), the harassment was in theform of three letters, only one ofwhich could be classed as meetingthe threshold for harassment:
The Act was concerned withcourses of conduct thatamounted to harassment,rather than with individualinstances of harassment. Thejudge therefore erred in failingto ask himself whether the threeletters as a whole couldamount to a relevant course ofconduct.
This appears to run contrary to thedecision in Conn and is a lowering ofthe bar with respect to this course ofconduct.
Comment
There seems to be something of arelaxation of the requirementsimposed by the court in Majrowski, aworrying downward trend thatappears to offer an all-too-easy routeinto litigation for ‘workplace stressclaims, in direct contrast to the highstandards laid down in Hatton (seepage 5).
Roy WoollardPartner and former head teacher
Your best defenceClaims defensibility – controlling riskand reducing cost
The impact of claims and their costscontinues to be a drain for manypublic-sector organisations. Thedifficulties arising from a public-liability claim, a work-related incident,an employment dispute, supply chainissue or contract dispute challengeresources and impact on keyoperations and service delivery.
The need to identify ways ofminimising the risk of claims and
Berrymans Lace Mawer page 11
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avoid the diversion of resources hasnever been more pressing.
Issues facing public sectororganisations frequently include:
n an inability to defend claimswhere appropriate due to a lackof key documentation
n frustration at having to defendfraudulent, spurious or unmeritedclaims
n settling claims where a defence iscompromised due to poorsystems and practices
n claims cultures within society orlocal areas often supported byaggressive claimant law practices
n employment disputes whichimpact on operational andstrategic planning
n absence management caused byan unhealthy claims culture
n the costs of claims on premiumsand the impact on financialresources.
Therefore, it is important that anorganisation is able to protect its
resources and manage its risks byunderstanding the causes of claimswithin its operations and to look atways to reduce and mitigate theclaims. By undertaking a claimsdefensibility review, organisationsshould be able to improve knowledgeand awareness of risks affectingdifferent parts of their operations.Improving internal systems can leadto knowing which valid claims shouldbe paid promptly. This also enablesorganisations to contest unmeritoriousclaims more robustly.
Proactive claims risk managementcan be driven to a large extent byanalysis of historical exposures;learning from previous incidents andan improved understanding of thecurrent civil and regulatory legalenvironment. Over time, adefensibility review should enable thepublic sector organisation to identifythose claims which are:
n capable of being defended, inwhole or in part
n valid, but where the impactshould be controllable
n exaggerated or exacerbated
n spurious.
Prevention not cure
Typically, there are trends which, ifaddressed and improved, would leadto public sector organisations beingbetter placed to prevent, reduce ormitigate incidents and claims.
n An early and detailedinvestigation of incidents/complaint. Whilst this should be‘taken as read’, frequently thereis a paucity of good incidentinvestigations and acorresponding lack of supportingevidence such as photographs,inspection reports, riskassessments, etc.
n For an employee claim, a well-documented and robust trainingprogramme, including refreshertraining, should be available.Inadequate training is often anallegation made during thecourse of a claim.
n Regular reviews of newguidance, changes to legislationand industry issues should becirculated across theorganisation to appropriatepersonnel. Where relevant issuesemerge, risk assessments shouldbe reviewed and updated,making the reason for the reviewclear and recording anyimprovements or changes whichare required. It is an old schoolsaying but ‘showing yourworkings out in the margin’ isgood advice to any organisationas it helps them to articulate andexplain decisions made whichcould be challenged severalyears later as part of a claimsprocess.
n An agreed claims-handlingphilosophy/protocol whichreflects an approach to be taken,eg, fraudulent claims. Byadopting a robust stance this canproduce benefits in terms ofsending a clear message tofraud gangs or localcommunities that spurious claims
page 12 Berrymans Lace Mawer
will not be tolerated.
n Linking risk assessments to safesystems of work, and ensuringthat the procedures are clearlycommunicated to all employeesand are incorporated into day-to-day working will go a longway to demonstrating adherenceto best practice.
n Test the strength of the supplychain and review contract termsand conditions. The impact thata failure of a contract, a claimarising from a contract dispute orthe loss of a supplier has on keyservices can be devastating. It isimportant to work withprocurement teams in advanceof contracts being formed toensure they strength-test theorganisation’s ability to deal witha such an event.
A claims defensibility review shouldenable the organisation to:
1 Reduce the frequency ofaccidents/incidents.
2 Reduce the frequency of claims.
3 Improve the ability to defendcases through better strategiesand improved practices andprocedures.
4 Improve awareness of theoutcomes of claims and learnhow to avoid future incidents.
5 Reduce the costs of claims byunderstanding that earlyadmissions in cases with nodefence will save costs in thelong term – defending theindefensible is not an option.
6 Improve the welfare of the publicand employees by improvingsafety awareness.
Claims defensibility reviews should beseen as an opportunity for a publicsector organisation to learn andimprove its risk and claims profiles.
Being aware of liability considerationsat the risk-assessment and risk-modelling stages can be critical inpreventing future losses but thisusually only comes with learning frompast incidents and claims. Embracethe past to improve the future.
Helen DeveryPartner
Emergency ahead!Works in progress
Earlier in 2012 the Technology &Construction Court (TCC) handeddown a decision which will be ofinterest to local authoritiesconsidering how they are going topay for emergency works to buildingswhere the owner is avoiding orunable to carry out those works.
Swindon Borough Council pursued aclaim against a developer known asForefront Estates Limited in relation toa Grade II listed building. The caseconcerned the dangerous state of a
building known as the MechanicsInstitute, which is a stone and brickbuilding constructed by the GreatWestern Railway and privatesubscriptions in 1855. The Institute islocated in a historically importantarea of Swindon and is surroundedby cottages and a hospital which waserected for railway workers. Itpresently sits in a conservation area.The Institute had not been used for itsoriginal purpose for a number ofyears and had not been properlymaintained.
After Forefront Estates acquired theInstitute in 2003, it obtained planningpermission to create flats within theproperty and some work had beencarried out to implement thispermission. However, in the main, thebuilding had simply decayed over anumber of years and following receiptof a report by a group of consultants,the council determined that urgentworks were required.
In 2009 Swindon BC proceeded tocarry out works relying on s78 of the1984 Building Act. Sections 77 and
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78 of the 1984 Act apply incircumstances where:
a building or structure or part ofa building or structure, is in sucha [state/condition] or is used tocarry such loads as to bedangerous.
The difference between the provisionsis that under s78 there is anadditional requirement that‘immediate action should be taken toremove the danger’. Section 78(2)requires a council (if it is reasonablypractical to do so) to give notice toan owner of a building.
The court explained that s78 isintended to be used in cases where itis necessary for the council to takeimmediate action to remove thedanger. Section 78(5) states that if thecouncil:
might reasonably haveproceeded instead under section77(1), then the council cannotrecover the expenses of takingthe section 78 measure.
Section 77(1) applies where there is adangerous building or structure, but itis not necessary to take immediateaction to remove the danger. In those
circumstances the council applies tothe Magistrates’ Court for an Orderand it is only if the owner fails tocomply with the Order within the timespecified that the council is thenentitled to execute the works andrecover the expenses from the owner.
Forefront Estates asserted that thecouncil should have asked it to carryout the works under s77 of the Actrather than under s78. The courtfound for the council in this instance,but explained that as the council hadidentified that there were key risks tothe building, primarily the possiblecollapse of the roof andcontamination in the event ofcollapse. It had identified that therewas white, blue and brown asbestoswithin the building and that much ofthe paint work was carried out usingheavily contaminated lead paints ofthe type used in the railway industryat the relevant time. As a result, it wasevident that there was an obviousdanger to the health and safety of thepublic either through collapse orcontamination via the release ofasbestos and lead. The court ruledthat the council was also able torecover its costs of carrying out theworks (assessed at £344,492.40 andincluding remedial works, consultancyfees etc). In addition, the council alsorecovered its costs of the action which
were summarily assessed at£60,128.30.
This judgment will be of comfort tocouncils. It offers appropriateguidance for consideration whendetermining whether or not worksshould be undertaken under s77 ors78. It is clear from the judgment thatthe court will take a close look at therequirement for the work, and in hisjudgment HHJ Ramsey warned thatthe fact that the required buildingwork is dangerous will not of itself besufficient to carry out work under s78.Additionally, he was not persuadedthat the failure by the developer tocarry out urgent works necessary topreserve a listed building and itsgeneral poor performance as tohealth and safety issues in relation tothe work, would alone make itreasonable for the council to proceedunder s78.
Summary
The fundamental question to beasked by any council is: is itnecessary to take immediate action toremove danger. If it is, then it isappropriate for the council to uses78, but if it is not, the fact that theowner of the works may not proceedsatisfactorily (or at all) within the s77works is not a reason for pursuing aremedy under s78 when s77 wouldbe the appropriate provision.
At a time when many buildings arefalling into disrepair because of thecurrent challenging economiccircumstances, this case is a usefulaide-mémoire to councils inpersuading owners of derelictbuildings to carry out important andnecessary works if there is a dangeror risk to health and safety.
Michael SalauPartner
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When is a dutynot a duty?
Local authorities may be interested inthe decision of Woodland v EssexCounty Council [2012] EWCA Civ239. The Court of Appeal (CA)confirmed that authorities’ obligationscan be delegated, and theresponsibility that local authorities willowe to users of their services whenthey have outsourced the provision ofthose services to external providers.
The facts
Annie Woodland, aged 10, was apupil at a school for which EssexCounty Council was responsible.Whilst at a swimming lessonorganised by the school, she sufferedbrain damage as a result of oxygenstarvation when she nearly drowned.The council had arranged for thelessons to be given through anindependent contractor, and had alsoarranged for an independentlifeguard to be contracted. Anniebrought a claim against the council.The key claim against Essex CC wasthat it was liable for any negligenceof the contractors on the basis that itowed a ‘non-delegable’ duty topupils. Authorities have a duty to takereasonable steps to ensure that anycontractors are ‘competent andcareful’, and that care for childrentakes place on apparently safepremises. Often, however, authoritiescan be liable even where they havetaken all reasonable care to ensurethat risk was minimised.
The background
The CA’s discussion of the nature of non-delegable duties will be usefulfor authorities. The court held that theschool’s duty to its pupils had notbeen non-delegable, but itrecognised that there may be asituation where local authoritieswould owe a non-delegable duty.Authorities will want to know whatthese situations may be.
For most duties, entrusting the care ofone’s obligations to a competentindependent contractor will besufficient. Non-delegable duties aredifferent. Where a non-delegable dutyis owed, the person who owes theduty is liable even if he/she hascontracted out to a competentcontractor. In the language of thecourt, it is a duty ‘not merely to takecare, but a duty to provide that careis taken’.
There are various establishedexamples of non-delegable duties innegligence. Employers owe theiremployees non-delegable duties,those performing work on a highwaywill owe non-delegable duties, andthose who keep dangerous things ontheir land will owe non-delegableduties under the rule in Rylands vFletcher. There are variousjustifications for these. For example, itis said that as the employer takes thebenefit of dangerous work activity, itmust also take the burden. In relationto Rylands v Fletcher, landowners areprivileged in owning land, and musttherefore take responsibility forkeeping it safe. Clearly, however,these justifications do not apply tolocal authorities in relation to pupils.
Principles of liability
Two hospital cases were consideredby the court: A (A Minor) v MOD[2004] EWCA Civ 641 and Farraj vKings Healthcare NHS Trust [2009]EWCA Civ 1203. In the first case, anoperation had been carried outnegligently in Germany, on behalf ofthe Ministry of Defence. In thesecond, a patient had been referredto an independent cytogeneticslaboratory run by a respectedindependent contractor. In bothcases, the CA had rejected the claim on the basis that non-delegable duties would only arise where thehospital was actually carrying out thecare.
The reasoning of the CA in the twocases was that a non-delegable dutywill only arise in situations where the defendant has control over the
environment in which an injury occurs.
The two hospital cases provided thebasis for the court’s decision inWoodland. The lesson, the lifeguardsupervision and the premises were notcontrolled by the authority. As such,the court found that the duty hadbeen successfully discharged by thecouncil delegating performance to anapparently competent contractor.
Control is the key
Local authorities now have a clearway of identifying where they will owea non-delegable duty. The decidingfactor will be control. A localauthority will have control over itsclassrooms, its teachers and its roads,for example. It would be pointless forthe courts to impose a non-delegableduty where there is no control, andthere would be no social value tosuch a policy. Tomlinson LJrecognised this when he said that:
the imposition of such a liabilitywould be likely … to have achilling effect on the willingnessof education authorities toprovide valuable educationalexperiences.
Whilst the issue of control is crystalclear in theory, the facts in real lifemay be muddier. Even in Woodland,Laws LJ (one of three judges)dissented on the basis that heconsidered that the facts gave rise toa non-delegable duty. Localauthorities must look to the control ofpeople, premises and organisationsas indicators of control, but they mustbear in mind that even amongst themost eminent judges, there is roomfor a difference of opinion.
Orla ScanlanPartner
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Taking ‘mental’out ofenvironmental risk
Highly complex environment mattersare popping up in all sorts ofsituations, from fines for practiceswhich were previously the norm, tonew regulations regarding waste andpollution, and the impact of waterresources on us all. How doesenvironmental risk analysis work?What is the thinking behind it? Thisarticle aims to simplify thoseconcerns.
The UK has a risk-based approach tothe environment, and Defra haspublished Greenleaves III – TheGuidelines for Environmental RiskAssessment and Management, see:
http://www.defra.gov.uk/publications/2011/11/07/green-leaves-iii-pb13670/
For those with risk-management
training or experience, this processshould sound comfortingly familiar.Replacing the 2000 Greenleaves II,this update caters for developments inscientific knowledge and informationwhich supports risk assessment, anddevelopments in the fields of riskassessment and managementthemselves. It is intended:
to guide policy and regulatorystaff in government and itsagencies, those assessing andmanaging environmental risks forgovernment, and other partiesinterested in the principles ofmanaging environmentalrisks.
The guidance gives practicalexamples of risk, including activities,hazards, exposures, harm and losses.Generally, assessing risk involves theanalysis of the consequences andlikelihood of a hazard being realised.The combination of a high likelihood and disastrous consequences give an assessment of high risk and vice
versa. Emerging risks are often seenas uncontrollable, not wellunderstood or not competentlymanaged; this uncertainty has to bemanaged as well.
Methods are described for estimatingthe probability of harm to or from theenvironment, the severity of the harmand uncertainty. These four steps arethe core of the guide.
1 Formulating the problem. Thisincludes developing aconceptual model setting out therelationships between hazards,exposure and environmentalfeatures before deeper analysis.This can include the source-pathway-receptor model and anoutline of the data requirementsfor risk assessment, and themethods needed for datacollection and synthesis. It alsoincludes screening andprioritising risks, to determinewhich risks should beinvestigated in more detail, andthose which can be screened out
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at this stage.
2 Assessing the risk. Expertevidence is always required. Thisprocess includes:
a identifying the hazard(s)
b assessing the consequences
c assessing their probabilities
d characterising risk anduncertainty.
3 Identifying and appraising themanagement options. (Zero riskis usually unachievable.) It is amatter of managing the risk toreduce it to tolerable levels.
4 Addressing the risk. Applying thechosen strategy, and takingaction, procedure or operationto fulfil the objectives of thestrategy identified at theappraisal stage in order to:
a mitigate the effects byimproving environmentalmanagement techniques
b terminate the source of therisk where possible
c transfer the risk through newtechnology procedures orinvestment or by insurance
d accept the risk by notintervening with new orexisting situations
e report strategy
f monitor and survey
g reduce uncertainty.
Environmental security is therelationship between protecting andenhancing our environment andallowing economic sustained growthin the long term. It aims to achieve abetter quality of life for everyone now,and for generations to come. Itrequires collective partnership
approaches to decision-making forenvironmental protection.
Environmental-management strategiesmust therefore consider economicdemands and social needs, with thecapacity of the environment to copewith discharges, pollution and otherperturbations, and to support humanand other life.
Economic considerations can beweighty and will influence theacceptability of any given option; thebest is likely to be the one with thegreatest excess of benefits over costs.The benefits are those accruing fromprotection from damage. The costs(monetary and non-monetary) areboth direct and indirect social,regulatory and private.
The precautionary principle must betaken into account. This states that:
Where there are threats ofserious or irreversible damage,lack of full scientific certaintyshall not be used as a reason forpostponing cost-effectivemeasures to preventenvironmental degradation.
Principle 15, Agenda 21, RioDeclaration 1992
In other words, a ‘wait and see’approach for scientific certainty willjust not do.
Involving stakeholders and the public
in the process is important. While itmay not be necessary to involve thesame people in all elements of theprocess, certain groups may take onactive roles within the decision-making process. Good decisions areoften informed and supported by theknowledge and concerns ofstakeholders and the public who maybe directly affected by them.
The following issues should also beconsidered: the acknowledgement ofignorance, real-world conditions,consideration of benefits as well asrisks, lay and local knowledge as wellas specialist expertise.
Summary
Recognising the dynamic nature ofenvironmental risk places arequirement on risk assessors andthose that commission riskassessments to monitor the outcomeof the risk-management strategy andrespond to changes when necessary.The implication is that environmentalrisk assessments need to be livingdocuments rather than static one-off reports.
So here we have a guide whichanalyses the risks relating to theenvironment, recognises andbalances competing interests, andgives a tool with which to create asuitable response. Not so complexand ‘mental’ after all.
Paula WhittellPartner
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Berrymans Lace Mawer page 17
So you think youare covered?
Eurocrest Ventures Limited v ZurichInsurance Plc Ch D [26 April 2012]
It is a common assumption in alandlord and tenant relationship topresume that each party has takenout insurance cover for the benefit ofthe other. Whilst this may be true inrespect of material damage cover, inthe court decision of EurocrestVentures it dismissed an argumentthat a tenant was entitled to liabilitycover under the landlord’s policy.
Eurocrest Ventures leased two flats innorth London. The freehold wasowned by a Mr A Halpern whoowned a portfolio of propertiesthroughout London. Directly belowEurocrest’s flats were commercialpremises leased to another tenant. InJune 2007 those premises werepartially flooded. The commercialtenant commenced proceedingsagainst its landlord for breach ofcovenant. The landlord in turncommenced Part 20 proceedingsagainst Eurocrest claiming anindemnity. Eurocrest then assertedthrough declaratory proceedings thatit was entitled to the benefit of theliability cover in the landlord’s policy,which had been issued by Zurich.
Whilst the schedule to the policy notedtenants’ interests in a general way:
It is understood and agreed that
the interest of various lessees inthe property insured may benoted at the request of theinsured but only in respect ofparts of the premises demised bythe lease to the individualtenant.
Judge Donaldson QC, sitting asDeputy High Court Judge, did notagree that this gave Eurocrest rightsas a policyholder. Eurocrest was notnamed on the insurance policy as aninsured, and noting of an interestmeans no more than recording itsexistence. Further, it was clear fromthe schedule that the interest beingnoted was, in any event, only inrespect of material damage and notliability. Finally, the fact that theContracts (Rights of Third Parties) Act1999 might apply did not helpEurocrest because this statute onlyprovides rights in respect of a contractterm that confers a benefit on therelevant party. The judge held Eurocresthad no such benefit. Eurocrest’sdeclaratory proceedings failed.
Comment
The judge’s decision is of widerrelevance to local authorities.Whether the authority is a landlordthat leases property or is a tenant ofa building, each party should make itclear what cover has in fact beenprovided. A tenant who is merelynoted on a policy does not become apolicyholder and, unless a clearbenefit is conferred on the notedparty (and providing the Third PartiesRights Against Insurers Act 1999 has
not been excluded), such parties willhave no direct claim under the policy.Mere noting is not enough.
Importantly, this decision confirms thatthe subject matter of the insurancecover being underwritten by aproperty owner’s liability policy is toprovide an indemnity to the propertyowner and not, as the claimant heresought, the claimant tenant’s liability.
This judgment should be useful tolocal authorities faced with argumentsby tenants claiming that they areentitled to a greater extent of coverthan that which was originallyenvisaged and which goes beyondthe interest insurers intended to give.
Helen Westran Associate
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Case update: tree roots
GA Berent v (1) Family MosaicHousing (2) Islington LBC [2011]EWHC 1353 (TCC)
Claims for tree-root damage andsubsidence
On 20 May 2012 the Court ofAppeal (CA) heard this case.Judgment was reserved and isexpected shortly (as at June 2012).The decision may be of generalrelevance to local authorities (andother organisations responsible forthe maintenance of trees which mayaffect the public), in particular theextent to which they can be heldliable for any tree-root damage tobuildings which occurred before anysuch damage was brought to theirattention (by the prospectiveclaimant or otherwise). BLM willreport on the CA judgment and itslikely consequences as and when itis handed down by the court.
Andrew PlunkettPartner
Atrip too farLawrence v Kent County Council[2012] EWCA Civ 493
The case highlights the importance ofidentifying the threshold for liabilityfor local authorities, in standardtripping cases.
The claimant in Lawrence had trippedover a protruding manhole cover,injuring herself as a consequence. Inmaking an assessment as to theheight of the protrusion, the judge atfirst instance was assisted by thehighways inspector, Mr Cunningham,who came to inspect it immediatelyafter the accident. He was alsoassisted by evidence of the claimant’sdaughter, Mrs Rose. Mrs Rose saw themanhole cover within days after theaccident, knowing her mother hadsuffered an injury.
The judge made a finding that theprotrusion was “at least 15mm” inheight. The defendant’s interventionlevel was 20mm. The claimant won atfirst instance, but the council,concerned at the precedent that couldbe set if a 15mm protrusion could be
considered dangerous and the highduty this would impose, appealed.
At the High Court, Eady J overturnedthe decision on the basis that thejudge had been wrong to admit theevidence of a lay witness on the issueof ‘dangerousness’. He decided thathaving upheld this ground of thedefendant’s appeal, he must thenreach his own conclusion on thesame material that was before thetrial judge. He took the view that themanhole cover extending 15mmabove ground was an ‘unremarkable’protrusion and accordingly thecouncil had not breached its statutoryduty.
The claimant appealed to the Courtof Appeal (CA) on the basis that EadyJ’s view as to the relevancy orirrelevancy of the witness evidencewas incorrect. The council cross-appealed, seeking to uphold the EadyJ decision even if his view on theevidence were wrong.
Witnesses of fact giving opinions
Eady J had found that the trial judgehad erred in giving any weight to MrsRose’s evidence because it amountedto lay witness opinion. The CA tookthe view that the evidence of lay
witnesses was not irrelevant, but thetrial judge had placed the evidence ofMrs Rose higher than she had put itherself. The trial judge’s comment onMrs Rose’s evidence had been thatshe thought it was “an obviouslydangerous feature in the pavement”.In fact, Mrs Rose had not used theword ‘dangerous’.
The inspector, Mr Cunningham,ordered a repair of the defectfollowing an inspection after theaccident. On a standard works orderhe circled the category ‘generalmaintenance’ rather than the ‘2 hour’or ‘3 day’ options, and heaccompanied this with the instruction‘make safe small trip’.
This instruction ‘make safe’ was oneof the factors that led the trial judgeto conclude that the protruding coverwas a danger to pedestrians in thesense that in the ordinary course ofhuman affairs danger may reasonablybe anticipated from its continued useby the public (the test set down inMills v Barnsley Metropolitan BoroughCouncil (1992)). This was despite MrCunningham’s oral evidence that hewould not have circled ‘generalmaintenance works’ for a defect heconsidered to be dangerous, and thisevidence was not challenged by the
Berrymans Lace Mawer page 19
judge or by counsel for the claimantas being untruthful. The CAconcluded that the trial judge haddealt with Mr Cunningham’s evidencesomewhat unfairly in relying upon hiswritten instruction as evidence that thecover was in serious need of repair.
The CA clarified that the weight whichis to be given to lay witness opinionevidence in any given case isdependent upon several factors. InLawrence, Mrs Rose was theclaimant’s daughter and thereforelacked independence as a witness. MrCunningham may have been heldresponsible for any failure to repairthe manhole cover in question, andhe may therefore have had an interestin portraying the manhole cover assafe, so as to lessen his responsibility.Nevertheless, the lay witness evidencein this case did not support a findingthat this 15mm protrusion wasdangerous to the extent it shouldhave imposed a duty on thedefendant to eliminate it. The trialjudge in sympathy for the claimanthad failed to keep in mind thebalance between the public and theprivate interest.
Approach of appellant court toappeals on fact
Eady J’s approach, having decidedthat the trial judge had take accountof irrelevant matters, was that he wasfree to look at the matter afresh andtake his own decision. This is theapproach of an appellate court wherewhat is under consideration is theexercise of a discretion. The CAconsidered that he was misled in thisapproach, even though the result maynot be different.
The appeal court must have regard tothe advantage the judge had inhearing the evidence and the wholecase and will examine whether thefindings of primary fact are justified.Even if there was no misdirection theappellate court is entitled to assessfor itself whether on those facts aninference or finding ofdangerousness, to an extent which
imposes a duty on the council, wasjustified.
Here, Eady J was misled insofar asboth parties conducted the case onthe basis that this judge wasexercising a discretion. However hewas right to examine whether the trialjudge misdirected himself or relied onevidence which he should not haverelied on.
Different reasoning, same conclusion
The CA found that it was not open tothe trial judge to conclude that themanhole cover was dangerous for thepurpose of section 41 Highways Act1981. The daughter’s evidence hadbeen put too high, and although theinspector’s evidence was notindependent, his evidence had beenunfairly misinterpreted by the judge atfirst instance as almost amounting toan admission of dangerousness. TheCA agreed with Eady J’s conclusionthat this protrusion in the footway wasunremarkable and not dangerous.
Helpfully, perhaps, for localauthorities Mr Cunningham’scontemporaneous record of theinspection in which he categorised thedefect as requiring only ‘generalmaintenance’ was ultimately acceptedby the CA as evidence that this defectwas not dangerous. Future cases willbe guided by the judgment inLawrence, which has clarified theduties of local authorities in relationto highway protrusions, as well as thecourt’s position on evidence given bylay witnesses, and serves as areminder of the need for courts tobalance the public/private interest.
Michael PetherPartner
Hannah MitchellSolicitor
This article was first published in LocalGovernment Lawyer, June 2012
Council (un)stuckin a rut
Courts have been focussing on theWell Maintained Highways – Code ofPractice for Highway MaintenanceManagement (the Code) published bythe Roads Liaison Group in July2005. The practical implications ofthis for highway authorities seeking todefend claims alleging breach of theirduty under section 41 of theHighways Act 1980 are highlightedby the recent High Court case of AC,DC and TR v Devon County Council(2012).
Facts
The case concerned an accident on a‘C’ class rural road in Devon CC inNovember 2006, just over a yearafter the Code was published. Theclaimant had attempted to overtakeanother vehicle at around 45mph ona straight section of road when theoffside wheels of his vehicle strayedinto a rut at the edge of thecarriageway. It was a familiarsituation to those who drive ruralroads; agricultural machinery hadchurned up the soft verge causing theedge of the tarmac carriageway tobreak up. This had generatedpotholes of varying depths amountingto a rut running along the unevenedge of the tarmac. The policemeasured the deepest of these atmore than 80mm.
The claimant lost control of hisvehicle and collided with a tree.Tragically, his passengers sufferedcatastrophic injuries. His insurersagreed to pay substantial damageswhich they sought to recover fromDevon CC.
The council argued that the rut, whichwas for the most part outside thecarriageway edge line, did not makethe highway dangerous and that theclaimant should have kept withinthose edge lines. It denied breach ofduty and raised a statutory defence
page 20 Berrymans Lace Mawer
under section 58. It also alleged thatthe claimant had contributed to theaccident by his own negligent driving.
Experts for both parties accepted thatthe rut was a safety defect and DevonCC accepted that it would haverepaired the defect had it knownabout it. The court found that thehighway was dangerous to traffic, inbreach of the council’s duty tomaintain.
Devon CC had categorised the roadas equivalent to a category 3(b)‘secondary distributor’ within thehierarchy suggested by the Code. Itinspected such roads every six monthswhereas the Code recommendedmonthly inspection. The fact that thecouncil’s neighbouring authority hadcategorised its part of the same roadas a lower category 4(a) ‘link road’and inspected every three monthssuggests the categorisation wasborderline.
The Code emphasises that itsrecommendations are not mandatoryand that highway authorities shoulddesignate their own carriagewayhierarchies and determine theirinspection frequencies according tolocal circumstances and the relativerisks and consequences associated
with these. Any variations from itsguidance should be derived followinga risk assessment and approved,adopted and published. The reasonsfor them should be clearly identified.Devon CC relied upon the absenceof previous accidents, low traffic flowsand the relative infrequency of defectsrecorded during inspections on suchroads in the county generally to justifyits six monthly inspections.
However, the court held that therehad been no formal risk assessmentby the council when settings itsinspection frequency or any review ofits procedures in response to theCode. Devon CC had, in essence,simply continued as it had before.There was insufficient evidence toshow that Devon CC had consideredall relevant matters when setting theinspection frequency. Evidence thatother authorities inspected similarroads on a six monthly basis wasdisregarded.
The council was held liable tocompensate the claimant and hisinsurers.
Somewhat surprisingly, the court alsoheld that the claimant had not beennegligent at all in overtaking as hedid, despite the fact that his
passenger had seen and warned himof the potholes.
Summary
This decision demonstrates the needfor highway authorities to be able toprove that they have taken intoaccount all the factors identified bythe Code, and the potential riskconsequences of them, whendeciding their highway hierarchy andinspection frequencies and, inparticular, to properly document andjustify any deviations from the Code’snon-mandatory guidelines.
The prospect of an over-literalapproach by claimants and the courtsto the Code’s emphasis on riskassessments should be a concern forall highway authorities.
This decision is being appealed andthe Court of Appeal is likely to deliverits judgment in Spring 2013. BLMshall reconsider the implications ofthe case when the outcome is known,and will keep readers informed.
Paul McCloreyPartner
Berrymans Lace Mawer page 21
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Dates for your diary – 2012BLM’s public sector specialists are involved in a number of in-house and external events throughout 2012. For up-to-date details, please visit the events page at blm-law.com
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