UK: UK Liability Quarterly

Last Updated: 15 May 2008
Article by Joe McManus and Tim Newman

Companies Face Increased Corporate Manslaughter Fines

Organisations convicted of corporate manslaughter (due to come in to effect in April) could face record fines under the new proposals by the Sentencing Advisory Panel (SAP). In its consultation released in January, the SAP proposes to impose a fine of as much as 10% of turnover on a first offence for companies guilty of corporate homicide.

The SAP also recommends that the courts should make publicity orders in respect of virtually every organisation found guilty of manslaughter.

Pleural Plaques Ruling In a debate in the House of Commons in January, Bridget Prentice, Under Secretary of State for Justice, said the government believed it would be inappropriate to review the law of negligence following the decision in Johnston v NEI International Combustion Limited [2007] UKHL 39.

This announcement would suggest that the government is unlikely to reverse the decision in Johnston where the House of Lords decided that pleural plaques were not compensable.

The situation is quite different in Scotland where the Scottish Executive is in the process of introducing legislation to reverse the House of Lords decision in Johnston.

Personal Injury Reform

Concerns that the government may have lost its appetite for reform of the compensation process have been allayed by the announcement of Justice Minister, Bridget Prentice, who has confirmed that government proposals to reform the personal injury process will be ready by the end of March.


Martins v Choudhary [2007] EWCA Civ 1379

The facts were that the defendant had engaged in a course of conduct against the claimant which included making racist remarks and deliberately colliding with the claimant's vehicle. The Trial Judge found that the conduct amounted to the statutory tort of harassment and that following the collision, the claimant developed a generalised anxiety state. Judgment was entered for the claimant with damages to be assessed.

At the quantum hearing, the Judge held that the harassment was the principal cause of the claimant's anxiety state. After considering the severity scale for psychiatric injury in the Judicial Studies Board guidelines, the judge awarded the claimant the sum of £12,500 for personal injury and £10,000 for injury to feelings.

The defendant appealed on the basis that the award should have been on a global basis, covering both the psychiatric injury and injury to feelings.

The Court of Appeal dismissed the appeal and said that there should be no "hard and fast rule about whether separate awards should be made. It will all depend on the facts of the individual case." If the psychiatric harm was modest and merged with the injury to feelings, in the Court of Appeal's view it would be more convenient to make one award dealing with both aspects. In this case however, as the psychiatric injury was substantial, it was helpful for the parties if the Judge separated the award for psychiatric injury from that for injury to feelings.

The judgment demonstrates that in cases where there has been substantial psychiatric injury and harassment, there is a possibility of separate awards and defendants and insurers need to be aware of that.

Pain Syndrome

Thorp v Sharp [2007] EWCA Civ 1433

The claimant appealed against a decision of a first instance Judge to award her damages of only £11,000 for personal injury. The claimant had suffered an accident in the course of her employment for which the defendant employer had admitted liability. The claimant had injured her hip and alleged that she was permanently disabled by chronic pain.

In subsequent proceedings, orthopaedic experts instructed by the parties produced a joint report and both experts were puzzled by the continuation of the claimant's chronic pain as there was no definable orthopaedic cause.

The defendant's expert was of the opinion that the claimant's injury should have resolved within 3-6 months while the claimant's expert considered it should have resolved within a year. Psychiatric and psychological evidence was adduced but ruled out any psychiatric injury on the claimant's part.

The Judge stated that the issue to be determined was whether the court could be satisfied, on the balance of probabilities, that the pain experienced by the claimant after the 12 month period could have been caused by the material incident. The court found that the claimant was a truthful witness and was suffering pain although prone to some exaggeration. The Judge found that the experts could not rule out that the pain was related to the accident, but the evidence did not show that it was related to the material accident. Therefore, on the balance of probabilities the Judge was unable to find the link between the accident and the pain currently suffered by the claimant.

The claimant's appeal was dismissed by the Court of Appeal. They stated that it was clear from the Judge's decision that he had meant that no physical link between the accident and the pain suffered by the claimant had been proved. Given that the experts had simply been unable to assert positively that there was an ongoing causative link, in the circumstances the Judge had been entitled to come to the decision he had come to.

The decision demonstrates the importance of carefully considering causation in pain syndrome cases and establishing whether, on the balance of probabilities, the accident has been responsible for the ongoing symptoms.

Limitation Act/Sexual Abuse Cases

A v Hoare [2008] UKHL 6

The House of Lords has rewritten the rules of limitation for civil claims resulting from physical and sexual abuse, including rape, allowing victims to sue in respect of claims which would have previously been time-barred.

In related cases, six claimants, some of whom alleged they had been victims of sexual abuse during their childhood, appealed against decisions that their claims were now statute barred. In each case the respective Judges, following Stubbings vWebb [1993] AC 498 HL, had concluded that the claims failed on limitation grounds.

Section 2 of the Limitation Act 1980 provides that the limitation period for tort is six years from the date on which the cause of action accrued. However, section 11 of the 1980 Act states that the limitation period for actions of "negligence, nuisance or breach of duty" in respect of personal injuries is three years from accrual or from the claimant's date of knowledge that his injury was significant (defined in section 14(2) of the 1980 Act as when he would reasonably have considered that his injuries were sufficiently serious to justify instituting proceedings). Section 33 of the Limitation Act 1980 gives the court a discretion where a claim would otherwise fail by reason of limitation to extend the period if it is equitable to do so. As background, the House of Lords in Stubbings v Webb decided that, in relation to cases involving trespass to the person, section 2 of the Limitation Act applied. Therefore there was no discretion with regard to limitation beyond a six year period after someone turned 18.

In this case, the House of Lords overruled their previous decision in Stubbings v Webb and ruled that in a claim for personal injuries caused by sexual assault, such claims should be decided under section 11 of the Limitation Act 1980. This allows a limitation period of three years from the date when the claimant first considered the injury sufficiently serious to justify proceedings and the possibility of an extension beyond that under section 33, if it is equitable to do so.

This landmark decision means that it will now be possible to bring claims for abuse that happened many years ago, provided that the court is satisfied that it is possible to have a fair trial.

Periodic Payments

Thompstone v Tameside and Glossop Acute Services NHS Trust; Corbett v South Yorkshire Strategic Health Authority; RH v United Bristol Healthcare NHS Trust; De Haas v South West London Strategic Health Authority [2008] EWCA Civ 5

The defendants appealed against decisions involving the making of periodic payment orders under the Damages Act 1996. In three of the four appeals the Judge decided to make an order under section 2(9) of the 1996 Act modifying section 2(8) by allowing for the amount of the payments to vary by reference to the Annual Survey of Hours and Earnings for the occupational group of care assistants and home carers (ASHE 6115).

As background, section 2(1)(b) of the Damages Act 1996 empowers a court to make a periodical payments order on all or part of a claimant's future loss. However, these future payments are linked to the Retail Price Index (RPI). Until Thompstone, claimants have been reluctant to embrace the provisions of periodic payments because of this link to RPIs. This was because some leading economists believe that linking future payments to the RPI index would be insufficient to keep pace with nursing and home care costs in future years. As such the value of payments would diminish over time as inflation would eat into them.

The Court of Appeal dismissed the defendants' appeals and concluded that the defendants' objections to ASHE 6115 were unfounded and that it would not be appropriate to reopen the suitability of ASHE 6115 in future proceedings unless the defendants could produce much stronger evidence.

The Court of Appeal also stated that it would only be in a rare case that it would be appropriate for a defendant to call expert evidence in order to show that the form of order preferred by the claimant would not best meet its needs.

The significance of this ruling for insurers is that claimants are much more likely to seek periodical payments, resulting in more expense for the defendant. It is however possible that this Court of Appeal decision will be apealed to the House of Lords.

Failure to Mitigate

Jeff Eaton v Birthram Jonston (2008) UKPC 1

The defendants appealed to the Privy Council against a decision by the Court of Appeal in the Cayman Islands. The claimant injured his hand and shoulder in a road traffic accident. For a two year period prior to the accident, the claimant had worked as an entertainer and as a tiler, although his work permit only allowed him to work as an entertainer. Following the accident, the claimant saw a number of doctors, one of whom recommended that he saw a hand surgeon, which he did not do. At first instance damages were awarded to the claimant.

On appeal, the defendants argued a number of points to reduce the damages payable. They argued that the claimant had failed to mitigate his loss by not acting on the doctor's advice in seeing a hand surgeon. However, the Privy Council held that the defendant had produced no evidence to show that the claimant had acted unreasonably. The Privy Council held that the burden of proof lay with the defendant, who had failed to call the specific doctor to give evidence. Further, it was also noted that this doctor was one of a number of doctors whom the claimant had seen and was the only one who had suggested a surgeon.

The issue of the claimant working illegally as a tiler was also raised by the defendants and whether this should be considered when assessing his loss of earnings claim. The Privy Council concluded that the claimant's earnings in the two year period prior to the accident provided the best evidence of his future earning capacity and that they should indeed take into account the claimant's earnings as a tiler when assessing his future loss claim. This is a rather surprising conclusion by the Privy Council.

Thirdly although the claimant had been a limbo dancer, he had also failed to disclose this fact to the doctors. The court held that although there was evidence of pre-existing degenerative changes in the claimant's cervical spine, it was the shock and jarring caused by the accident which had triggered the symptoms.

Lastly, the Privy Council found that the lower court should not have reduced the claimant's award for loss of earnings on the basis that the claimant may have died before reaching retirement or his accelerated receipt of future earnings. The Privy Council held that these factors had already been taken into account by calculations in the Ogden table.

The decision of the Privy Council that the claimant's earnings in respect of his work as a tiler should be included when assessing future loss of earnings is surprising in the light of the Court of Appeal's decision in Hewison v Meridian Shipping PTE [2002] EWCA Civ 1821 which confirmed that a claimant could not rely on an unlawful activity to enable recovery in a personal injury claim.

Fraudulent Claims

( 1) Trevor Francis (2) Cecilia Henry (3) Tyrone Reeves v (1) Donna Wells (2) Churchill Insurance Co Ltd [2007] EWCA Civ 1350

The defendants appealed against an order for damages awarded to the claimants. On receiving the claim the insurers had discovered that one of the claimants had been involved in two previous accidents with the same third party over the past eleven months.

The Judge at first instance, whilst recognising the suspicious circumstances of the claimant's evidence, found that the defendants had failed to provide sufficient cogent evidence to support their claim of fraud and conspiracy and that the claimants had indeed proved their case on the balance of probabilities. The defendants appealed on the basis that the Judge had failed to consider the overall significance of the two men being involved in three separate accidents in less than a year.

The Court of Appeal, allowing the appeal, found that the trial Judge had not addressed the combined effect of the various factors. The inconsistencies in the evidence were not only between the different witnesses but also within the evidence of each separate witness. The co-incidence of the three separate accidents apart, there was plenty of material which questioned the reliability of the claimants' evidence.

This decision confirms that the Appellate Courts are increasingly taking a robust stance on fraudulent claims.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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