Liability round-upIssues forum – January 2010

Liability round-up – January 2010

Contents

Liability round-up2009: A year of recession 1New supreme court for the UK 1First Corporate Manslaughter Prosecution 1In the news 2Corby group litigation 2Benefiting from crime is againstpublic interest 2Asbestos 3Pleural plaques 3Minimally symptomatic andasymptomatic asbestosis 3PUWER 5Occupiers liability 6First reported applicationof the Compensation Act 7Harassment thresholdremains high 8Conclusion 9

2009 was a tough year for UK businesseswith the effects of global recession hittinghard. The Bank of England reduced interestrates to record low levels and pumpedmoney into the economy as a “quantitativeeasing” measure. Even H.M. Customs andRevenue were being more lenient. Therewas no sign of the judiciary adopting amore lenient attitude but neither was therethe same amount of new legislation andregulation as in 2008 and the numerousprosecutions under the CorporateManslaughter and Corporate Homicide Act,forecast by some commentators, did notmaterialise. A bill to set up a fund of lastresort for employers’ liability claims wasshelved when it failed to secureparliamentary time for a second reading.

New supreme court for the UKOne important legal change which didtake place was the foundation of the UKSupreme Court in October replacing theHouse of Lords as the court of final appealfor all UK civil cases and for criminal casesin England, Wales and Northern Ireland.

The 12 law lords who formerly heardappeals to the House became the firstjustices of the Supreme Court.

The change corrects a constitutionalanomaly where previously law lords hada dual role as both judges and peers whowere entitled to participate in politicaldebates and to vote in the House of Lords.In practice this seldom happened but nowleading judges will no longer be able toparticipate in the business of the Houseof Lords.

First Corporate ManslaughterProsecutionThe Corporate Manslaughter andCorporate Homicide Act took force on6 April 2008 but it was not until June 2009that the Defendant first appeared in court.Cotswold Geotechnical Holdings Ltd wascharged following the death of an employeein September 2008, who was crushedwhen the pit he was working in collapsed.

The lack of prosecutions under the Acthas prompted speculation that the policeare struggling to deal with legislation whichis aimed at organisations as opposed tooffences committed by individuals, whichthey more commonly deal with. Supportersof the Act hope that a successful prosecutionin this case may lead to a greater willingnessto bring charges in future.

The hearing in this case is not due to takeplace until February of 2010 by which timesentencing guidelines should be in place.The Sentencing Guidelines Council haspublished proposals for sentencing as partof a consultation process due to concludein January 2010. It looks likely that fines willbe in the region of millions of pounds withcompanies also being obliged to publicisetheir convictions.

“The opening of the Supreme Court isa major constitutional milestone and achange that will help build the country’sfuture.”

Lord Bach, Justice Minister

2009: A yearof recession

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The courts were asked to rule in some highprofile cases in 2009 attracting widespreadmedia comment.

Corby group litigationIn this well publicised case 18 children andyoung adults sought damages from theirlocal council in respect of serious birthdefects ranging from shortened fingers tomissing limbs. These had allegedly beencaused by their mothers’ exposure toharmful substances during the council’sreclamation work of a large disusedsteelworks. The court was asked toconsider a number of preliminary issues.

In respect of 16 of the 18 claimants, thecouncil was found to be in breach of itsduty of care in exposing the pregnantmothers to mud and dust containingcontaminants over a 15 year period andliable for public nuisance under Section 34of the Environmental Protection Act 1990.

Further hearings are now pending for the16 successful claimants who still need toestablish that the exposure actually led tothe birth defects suffered for their claimsto succeed. In the 2 remaining claims thepregnancies fell outside of the 15 yearperiod (where breach of duty was heldto have occurred) and cannot succeed.

Benefiting from crime isagainst public interestIn Gray v Thames Trains and Network RailInfrastructure Ltd the claimant was apassenger on one of the trains involved inthe Ladbroke Grove rail crash. He escapedwith only minor physical injuries but thehorrific events he witnessed led to himsuffering severe post traumatic stressdisorder. He subsequently stabbed astranger to death after a “road rage”incident and was convicted of manslaughter.He escaped a murder charge by reason ofdiminished responsibility and was detainedin hospital with an indefinite restriction order.

The claimant brought an action seekingdamages for loss of earnings, generaldamages and an indemnity against anyclaims from his victim’s dependents. Thedefendants successfully argued that theprinciple of ex turpi causa (i.e. there can beno compensation for the consequences ofthe claimant’s own illegal act) applied to theclaim for general damages relating to themanslaughter and for the loss of earningsafter that event.

On appeal however the Court of Appealallowed the claim for loss of earnings afterthe manslaughter, holding that the lossstemmed from the psychiatric injury causedby the claimant’s negligence and that theclaimant would have suffered a loss ofearnings whether or not he had committedmanslaughter. The defendants made afurther appeal to the House of Lords whounanimously rejected the Court of Appealsfindings. The doctrine of ex turpi causaapplied both in a narrow and a broad sense.

The claimant could not on the narrowinterpretation be awarded damages thatwould lessen the impact of the sentenceimposed by the court. In the broad sensealso, compensation could not be awardedwhen it would offend public notions offairness.

In the news

Pleural plaquesBack in 2007 the House of Lords ruledthat claimants who had pleural plaquesbut no other condition or symptoms werenot entitled to claim damages. Almostimmediately a bill was drafted by the SNPin Scotland to counter this ruling and afterintensive lobbying by claimant solicitors,trade unions and others the Damages(Asbestos –Related Conditions) (Scotland)Act 2009 was introduced.

Insurers however successfully campaignedfor a judicial review of the new Act and allnew actions in Scotland have been put onhold until the review is completed.

South of the border the Damages (Asbestos–Related Conditions) Bill received its firstreading in the Lords on 19 October. At thetime of writing, it remains to be seen if thisbill will be enacted.

Minimally symptomatic andasymptomatic asbestosisAfter the Lords ruled that damages werenot recoverable for pleural plaques alonethere was considerable speculation aboutwhether there would be a new focus forsmall asbestos related claims.

In 2009 four test cases were heard intheNewcastle County Court where claimantssought compensation for asbestosis eventhough they were experiencing eitherminimal or no symptoms. In Beddoes andOthers v Vinters Defence Systems andOthers two of the claimants were held tohave suffered no material injury and theirclaims were dismissed.

The remaining two claimants however,Beddoes and Cooksey, were successfuleven though the levels of their respiratorydisabilities were small. Beddoes had anestimated respiratory disability of 5% ofwhich 1.6% was due to asbestosis.

Cooksey also had respiratory disability of5% of which only 1.25% was asbestosisrelated. Taking into account the likely futureprogression of the disease in each casethe claimants were awarded £11,375 and£13,612 respectively.

The lung damage in these cases waspicked up by CT scans rather than dueto the claimants experiencing symptoms.Whether these cases will lead to a rashof further actions, arising from speculativemedical investigation remains to be seen.

Asbestos

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In 2008 the Court of Appeal set anotherimportant precedent limiting the very widescope of the Provision and Use of WorkEquipment Regulations. In 2009 theHouse of Lords upheld this decision.

The case of Smith v NorthamptonshireCounty Council involved a care worker’sclaim against her employers for injurycaused when a ramp, that she was pushinga wheelchair-bound client down, collapsed.The ramp was not owned or maintained byher employers and they had no authority torepair or replace it. The Court of Appeal heldthat for the ramp to come within thedefinition of work equipment the employersmust have some degree of control over itand clearly in this case they did not. By amajority of 3-2 the Lords agreed.

Later in the year the Court of Appealonce more considered what fell within thedefinition of work place equipment but thistime the issue was not one of control butof whether the use of the equipment hadbeen permitted by the employer

In Couzens v T McGee and Co Ltd theclaimant had been injured in a road trafficaccident when his tipper lorry overturneddue to excessive speed. The claimantalleged that his employers were responsiblefor the accident. He had been unable to

take his foot off the accelerator and put iton the brake as his trouser leg had snaggedon an L-shaped piece of angle iron which hecarried in the side pocket of the lorry door.

The claimant’s case was that his employerswere negligent in failing to provide a safeplace for the storage of this make-shift tool!The employer’s drivers were supplied withshovels for cleaning out spoil left in theirtrucks after tipping but they also usedsmaller sharper tools such as trowelsor paint scrapers for cleaning mud fromlocking mechanisms and tyres.

The defendants pleaded that these toolswere unnecessary and that they did notknow that they were being used. At trialthe defendant’s health and safety directoradmitted that he was in fact aware that toolslike these were used but he had never seena piece of angle iron used before. Lorrieswere inspected regularly and had the angleiron been spotted he would have stoppedit being used. There was no evidenceproduced to show that the angle iron hadbeen in use for a long time.

At first instance the court accepted thatthe angle iron did fall within the definitionof work equipment despite also finding thatit was not “a reasonably necessary item ofequipment”. It might not have been supplied

by the employer but it had been used bythe employee at work. The defendantshowever were not liable. There was nobreach of section 4 of PUWER becauseboth the use of the angle iron and themethod of storage were unforeseeable.There were also no breaches of regulation9 because the driver should have beensuitably “trained” by his long experienceto store it safely without the need forformal training.

The claimant unsuccessfully appealed.The Court of Appeal agreed with the earlierdecision that the defendants were not liablebut for very different reasons. It was heldthat an item of equipment not supplied byan employer could not be considered workequipment under the regulations unless itsuse was permitted by the employer eitherexpressly or such permission was impliedor could be deemed to apply (i.e. where anemployer ought to have known that an itemwas being used). Since on the facts of thiscase the angle irons use was not permittedit was not work equipment and there wasno breach of regulation.

PUWER

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The Courts continued to take a pragmaticview with regards to obvious hazards andclaimants acting in a dangerous way atleisure facilities.

In the High Court case of Baldachinno vWest Wittering Estate PLC the then 14year old claimant was paralysed from theneck down after he jumped off a navigationbeacon into shallow water on thedefendant’s beach.

The claimant alleged that the defendantswere either in breach of their statutory dutiesas occupiers or negligent in common law forfailing to warn him of the risks of diving andfor failing to supervise him on the beach.

The judge, whilst clearly sympathetic to thesuffering of the claimant, could find no liabilityon the part of the defendant. He held thatthe claim under the Occupiers Act 1957could not succeed because the claimanthadnot been invited or permitted to climb on thebeacon and was not therefore a “visitor”.

The judge accepted the defendant’sevidence that the claimant’s group had beenwarned by lifeguards earlier of the dangersof jumping from the groynes and although itcould not definitely be said that the claimanthad heard this warning it was clear that thelifeguards had not ignored or condonedjumping from structures on the beach.

The judge also considered the Occupier’sLiability Act 1984 which covers trespassers.He summarised the test for liability underboth Acts as “was the relevant part of thepremises inherently dangerous?” Heconcluded that it was not.

So far as common law negligence wasconcerned, the judge concluded that thesystem of lifeguards on the beach providedadequate supervision and that there wasno duty to warn against dangers that wereperfectly obvious.

Occupiersliability

Following a number of high profile claimsinvolving public leisure facilities theCompensation Act 2006 was introducedin part to try and stop litigation riskdiscouraging leisure activities. Section 1of the Act allows the courts to considerwhether their decision will prevent ordiscourage a “desirable activity”. The Actwas not considered in the Baldacchino casebut it was applied for the first time in 2009 invery different circumstances to those whichwere probably intended when it drawn up.

In Hopps v Mott MacDonald and Ministryof Defence the unfortunate claimant wasinjured, whilst working in Iraq, by animprovised explosive device. He sued bothhis employers and the Ministry of Defenceon the basis that they had failed to takereasonable care of his safety. The claimanthad been travelling in a soft skinned vehicle(escorted by soldiers) and argued that heshould only have been transported inan armoured vehicle which would haveprevented some or all of his injuries.

Dismissing the claim, the court found thatthe decision to transport the claimant in asoft skinned vehicle was not unreasonablegiven what was known by the army aboutthe security situation at the time. There wasalso no evidence that an armoured vehiclewould actually have made a significantdifference to the extent of the claimant’sinjuries.

The court also found that the CompensationAct 2006 applied. Although the incidentoccurred prior to the enactment of thatlegislation it was in force by the time thatthe court came to consider the case.Section 1 of the Act allows the court totake into account whether their decision willprevent or discourage a “desirable activity”.

In this case the confinement of key workersto base until armoured vehicles wereavailable would have prevented vitalreconstruction work to Iraqi infrastructurethus preventing a “desirable activity”.

First reportedapplication of theCompensation Act

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The courts continued to apply a highthreshold in claims for harassment. InDowson (and Eight Linked Claims) v ChiefConstable of Northumbria the High Courtconsidered whether the defendant policeforce were exempt from the Protection fromHarassment Act 1997 under the provisionsof section 1(3) (a) which excluded conductpreventing or detecting crime.

The 9 claimants sought damages for allegedwork place bullying and the court held thatas the conduct complained of was notspecifically pursued for the purposes ofcrime prevention or detection the exemptiondid not apply.

The court did however grant an earlyapplication by the defendants to strike 3of the 9 claims out because the conducthad not, been of sufficient seriousness (inone case little more than work place banter),had not been specifically targeted andhad not amounted to a course of conduct(each of the three claims being based ona single event).

This case follows earlier judgments tothe effect that unless claimants candemonstrate that the conduct, of theirsuperiors or colleagues, is not merelyunattractive but oppressive, their claimswill not succeed and may well be struckout at an early stage.

Harassmentthresholdremains high

“I am in no doubt that the conduct withwhich DC Miler complains does not beginto amount to harassment.

I am afraid that I consider it risible tosuggest that DCI Pallas’s remark aboutthere being “too many shaven headeddetectives from Newcastle” could possiblyamount to harassment.”

Mr Justice Coulson

2009 has been overshadowed by recessionand concerns over the long term stabilityof the economy. Businesses did have tocontend with some legal change but notnearly to the same extent as 2008.

This year will see a general election anda new round of legal reform may wellcommence thereafter. We can only hopethat by then the UK economy will bemoving firmly out of recession.

Further informationYou can find further information atwww.QBEeurope.com/RM

Author biographyJohn Tutton, Claims Controller,Strategic Claims Team.

John was recruited to the then EnsignClaims Department in 2004 to providesupport on catastrophic injury claims. Hejoined the Strategic Claims Team whenit was set up in 2006 and specialises inacquired brain injury claims.

John has worked in the insurance industryfor over 25 years.

Completed 11 December 2009 – Copiesof case judgements and source materialfor the above items can be obtained fromJohn Tutton (contact no: 01245 272756,e-mail: john.tutton@uk.qbe.com).

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Conclusion

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