Contents
Editorial.............................................................................................................................. 1
Future direction for interim payments ............................................................................. 2
Round 1: EL Trigger Litigation challenge misfires ......................................................... 3
Lighter load: declaration of non-liability is aprpoved ..................................................... 5
Deliberate damage and notification of a claim – recent insurance decisions .............. 6
The reasonable driver ....................................................................................................... 9
Insurance contract law reform: what you need to know ................................................ 11
Shots in the dark: applying Ogden 6 ............................................................................... 13
Overcoming the barriers to rehabilitation ....................................................................... 14
H&S breach could now put you behind bars ................................................................... 15
Marper – the end of the road for the UK DNA database? ............................................... 17
Prevention is always better than cure ............................................................................. 18
Insurers in credit hire tug of war: intervention and failure to mitigate .......................... 20
Rules of Rome II – choice of law ...................................................................................... 22
Why health and safety cutbacks could be bad for your health ...................................... 23
When is work equipment not work equipment?.............................................................. 25
Guidance to ‘credit crunch’ claims .................................................................................. 26
Twists and turns of limitation: an update ........................................................................ 28
White collar fraud: your response ‘toolkit’ ...................................................................... 30
Costs appeal spotlight ...................................................................................................... 32
Clarity for comparator test in disability discrimination? ................................................ 33
BLM reports ....................................................................................................................... 35
BLM briefing ...................................................................................................................... 36
Page 1
Editorial
As our economy is set to shrink by 3% in the next 12 months, unemployment is predicted to rise beyond
three million and public borrowing is expected to reach unprecedented levels, governments, businesses
and citizens are struggling with the consequences; pundits are rightfully asking what lessons can be
learned from history, wisely concluding that even the most compelling historic revelations have only
limited applicability to modern times. A timely reminder that the world does not stand still and that we
must embrace change and the challenges that brings.
Whilst musing on change, I wish to thank our guest author, David Hertzell (Law Commission), for his
helpful summary of the consultation on reform of insurance contract law and we await the amended
proposals with interest. In the same vein, Catherine Hawkins pens a useful reminder on some recent
insurance law decisions.
As Alistair Kinley warned in his editorial in Disclosure 12, November 2008, things are getting tough and
will get tougher. The pressure on cash and therefore claims is even more acute. Perhaps inevitably, the
prospect of an increase in fraudulent claims will materialise; Caroline Kane’s article is a useful reminder
of the tools at your disposal in handling such claims.
The commercial activity of credit hire operators seeking to maximise revenue continues to cause issues
for motor insurers involved in credit hire claims and occupy court time. Sarah Cartlidge’s article brings
us up to date on those issues. There are also timely reminders and words of caution in two of the
articles on the impact of cutting corners on costs with regards to health and safety in the workplace.
For those involved in high value personal injury cases, the recent judgments in Eeles, Toropdar and
Stewart, all cases conducted by BLM on behalf of insurers, should be useful additions to your tool kit in
handling the difficult issues that arise in those cases.
We also cover updates on limitation, costs, Rome II, issues of national significance on the proposed
national DNA database and, for good measure, a reminder of the impact and cost of environmental
claims following the implementation of the new Directive.
It is our aim to deliver our perspective on the evolving challenges across the spectrum of activity which
results in claims. We welcome comment and enquiry and invite you to contact our editorial board at
disclosure@blm-law.com
As ever, BLM will keep you closely advised.
Val Jones
Partner, BLM Manchester
Page 1
Future direction for interim payments
On 13 March the Court of Appeal (CA) handed down judgment in Eeles v Cobham Hire Ltd. It
overturned an earlier decision to award the claimant an interim payment of £1.2 million. In so doing the
court gave guidance as to the approach to be taken in heavy personal injury claims to ensure any
interim payment award does not encroach on the trial judge’s ability to make a Periodical Payment
Order (PPO).
The Civil Procedure Rules enable the court to make an interim payment where judgment for damages to
be assessed has been obtained or liability is not realistically in issue and the defendant is insured, or a
public body.
Provided these criteria are met the court will generally award an interim payment for a sum no more
than a reasonable proportion of the likely amount of final judgment (part 25.7(4) CPR).
Prior to the advent of periodical payments, judges hearing an interim payment application would usually
make a preliminary estimate of the likely final award, and then order an interim payment which was
comfortably within that margin in case that estimate turned out to be too generous. In heavy personal
injury claims this has lead to the award of very large interim payments.
Since the Damages Act 1996 was amended by the Courts Act 2003, the trial judge has had the power to
make a PPO regardless of the parties’ wishes. Indeed, part 41.7 CPR obliges the court to make
whatever order it considers best meets the claimant’s needs. In Thompstone v Thameside & Glossop
NHS Trust (2008) EWCA Civ 5 the CA highlighted the need, in many cases, for both a lump sum to
purchase capital items and periodical payments for long term security. The practice of awarding very
large interim payment awards can encroach on the trial judge’s ability to award periodical payments. If
the judge hearing the interim payment application makes an award which includes items of future loss
he runs the risk of fettering the trial judge’s ability to make a final order in the claimant’s best interests.
The conundrum was addressed by Stanley Burnton J in Braithwaite v Homerton University Hospitals
NHS Foundation Trust [2008] EWHC 353. He concluded that in a case where the court was likely to
consider making a PPO at trial the court could only award as an interim payment a reasonable
proportion of the capital sum that the claimant was likely to recover at trial. Losses which were likely to
be the subject of a PPO should not be taken into consideration.
Notwithstanding Braithwaite, courts of first instance continued to make large interim payments on the
basis that:
a the money belongs to the claimant
b if he chooses to have the money as a capital sum rather than as periodical payments the trial
judge is likely to so order, and
c it is not for the court to investigate how the claimant intends spending his damages.
Benjamin Eeles is an 11-year-old boy who suffered a serious head injury. He has made a good physical
recovery and now has reasonable motor co-ordination. His main difficulties are with cognition and
intellect. His life expectancy is normal. He lives with his family in a five bedroom house. Liability has
never been disputed and he has received interim payments totalling £450,000, part of which have been
used to extend that house to provide a therapy room. In October 2008 the claimant sought a further
interim payment of £1.2 million to enable him to purchase and adapt a substantial dwelling. At first
instance Foskett J granted the application. He made a conservative valuation of the overall capital value
of the claim at £3.5 million. He observed that an offer of £1.2 million, together with interim payments
which had been made already, amounted to less than half of the full value of the claim. He concluded
that would not exceed a reasonable proportion of the likely award.
In allowing the appeal the CA endorsed the approach in Braithwaite. It summarised the approach a
judge should take when considering an interim payment in a case where the trial judge may wish to
make a PPO:
1 The judge should assess the likely amount of the final judgment. The amount of the final
judgment is the actual capital sum to be awarded. That capital sum comprises only general
damages, special damages to date, interest and, in appropriate cases, accommodation costs.
2 The assessment of the expected capital sum (ie general damages, special damages, interest
and, in appropriate cases, the accommodation claim) should be carried out on a conservative
basis. Provided it is, the judge hearing the interim payment application can make a reasonable
Page 2
proportion of that capital sum and a reasonable proportion may well be a high proportion.
3 The capital sum to be awarded does not include the notional capitalised value of the PPO. It
does not include, therefore, all other heads of damage (future loss of earnings, costs of care,
case management, therapies, equipment, increased holiday costs and Court of Protection
costs).
4 There will be cases where the judge at the interim payment stage will be able to predict
confidently that the trial judge will capitalise additional elements of the future loss claim so as to
provide a greater lump sum. For example where, as is often the case, the money is required to
buy a house, the judge must be satisfied there is a real need for the interim payment at the
time the application is made (as opposed to after trial); that the amount requested is
reasonable and he/she can predict confidently the trial judge will endorse the capitalisation
undertaken.
5 The judge need not have regard as to what the claimant intends to do with the money. If the
claimant is of full age and capacity he/she can spend it as he/she sees fit. If the claimant is a
minor or lacks capacity the expenditure will be controlled by the Court of Protection.
The CA has again emphasised the importance of periodical payments in providing for the long term
security of severely injured claimants. The judgment in Eeles preserves the trial judge’s ability to order
periodical payments for all heads of future loss, save for those related to accommodation claims. It
follows, in major loss personal injury claims, the judgment will also restrict a claimant’s ability to recover
substantial interim payments.
A claimant who needs accommodation now (as opposed to after trial) will still be able to recover an
interim payment to purchase and adapt property, but he is going to have to satisfy the court that there is
a real need for the accommodation and the amount of money sought is reasonable.
Stephen Hazelton
Partner, BLM Birmingham
Round 1: EL Trigger Litigation challenge misfires
The financial cost to the insurance industry of its asbestos liabilities has been disastrous. The ‘Trigger
Litigation’ is an attempt by four insurers (BAI, Independent, Excess and MMI) to challenge the traditional
approach to causation under their insurance policies for the asbestos-related condition mesothelioma. It
occupied the High Court for 41 days in the summer of 2008 and is set for appeal in 2009.
‘Trigger’ clauses
Most EL policies respond in respect of industrial diseases ‘caused’ during the policy period. It is the
word caused that triggers the insurer’s liability to its policyholder. It has traditionally been accepted by
EL insurers that mesothelioma is caused when the victim is exposed to asbestos fibres. Therefore the
insurer on risk at the time of exposure will pay the eventual claim. This is known as the ‘causation basis’
for dealing with claims. However, a small number of insurers (including the ‘Trigger 4’) wrote their cover
on subtly different terms.
Their policies would be triggered only if the disease was ‘sustained’ or ‘contracted’ during the policy
period. Until Bolton v MMI 2006, these insurers operated their policies on the traditional causation basis.
Following Bolton, this practice changed, and the Trigger Litigation became inevitable.
Bolton v MMI (2006)
This case concerned the MMI public liability policy. It responded in respect of diseases which ‘occurred’
during the policy period. In Bolton, the Court of Appeal (CA) decided that mesothelioma does not ‘occur’
when the victim was first exposed to asbestos fibres. It is not until many years later that the disease will
begin to develop. On the medical evidence in Bolton, it was held that the first cancerous mesothelioma
cells appeared 10 years before the condition became symptomatic.
On that basis, the CA considered the mesothelioma had ‘occurred’ for the purposes of the PL policy 10
years before symptoms became manifest. Therefore the mesothelioma in a claimant who was exposed
Page 3
in the 1970s, and who became symptomatic in 2006, would have ‘occurred’ in 1996. The PL policy for
that year would respond.
The similarities between the Bolton ‘occurred’ policy and the Trigger 4 insurers’ ‘sustained’ policies is
striking. They therefore decided to apply Bolton to their EL claims, and consequently declined to
indemnify on the traditional causation basis. As all four insurers had ceased to writing cover long ago,
this decision meant that they would no longer be responsible for mesothelioma claims – leaving a
number of high profile insureds and local authorities without cover.
The key issues
The case was litigated on numerous legal fronts. However, the four most important issues were:
1 Did the wording of the EL policies mean that they responded when the injury was caused (ie
exposure) or at some subsequent date when it was ’sustained’?
2 For trigger purposes was mesothelioma ‘sustained’, on exposure to asbestos (when the fibres
were first inhaled) or shortly thereafter?
3 Did the Employers’ Liability Compulsory Insurance Act 1969 (ELCIA) require a causation
wording?
4 Were the four insurers bound by established usage/estoppel as each had paid out
mesothelioma claims on the causation basis for many years?
The judgment
The first issue turned out to be critical. Having heard both sides’ interpretation of the ‘sustained’ EL
wordings, the judge concluded that the meaning of the policy was ambiguous and therefore open to
interpretation. Looking at the factual background, and the commercial purpose of EL cover, he
concluded that insurers had in the past interpreted the words ‘caused’ and ‘sustained’ interchangeably in
EL policies. Claims had always been dealt with on a causation basis, and the four insurers’ policies
should respond accordingly.
On the question of identifying when mesothelioma is sustained, the judge was persuaded, on the weight
of authority, that mesothelioma is not actionable at the point of inhalation. With that in mind the judge
followed settled authority and concluded that, for trigger purposes, there is no injury – actionable or
otherwise – at that point.
Turning to the ELCIA, the judge held that a causation wording would best achieve the aims of the Act by
ensuring there were no gaps in cover. However, he did find that ELCIA did not specify any particular
type of wording.
On the final issue, the judge was not satisfied that there was sufficient evidence of a widely understood
and binding usage. Whilst all four insurers had operated their policies on the causation basis, their
reasons for doing so varied widely. As to estoppel, the policyholders had suffered no detriment by
entering into contracts with the four insurers.
Comment
Ever since industrial diseases with long latency periods first began to be identified, EL policies have
been operated on the causation basis. The judgment restates this position and the challenge by the four
insurers failed.
Interestingly, the judgment makes lengthy reference to what the judge called the ‘mesothelioma
jurisprudence’. The court was clearly aware that both Parliament and the
higher courts have treated mesothelioma as a special case in respect of both causation and the liability
of joint tortfeasors – see Fairchild and the Compensation Act.
The insurers have appealed. All four assert that the words ‘sustained’ and ‘contracted’ can only refer to
one event, namely the start of the cancer itself.
Page 4
The sting in the tail
Bolton was based on the long accepted view that a victim can only be said to be suffering from
mesothelioma when the first cancerous cells appear – and that is 10 years before symptoms. In light of
the medical evidence heard in the EL Trigger Litigation, the judge doubted this. In his view, only when
the tumour was big enough to escape the body’s defence mechanisms, and begin exponential growth,
would a claimant start to suffer from mesothelioma. The judge then went on to find this date was
approximately five years before symptoms.
Although the four insurers have not sought to challenge this ‘five year rule’, some of the claimants and
insureds that oppose them, have done so. This means that both the medical and contractual
interpretation cases will go forward to the CA in 2009.
Disclosure will keep you up to date with ‘Round 2’.
Henry Bermingham
Partner, BLM Birmingham with contribution from
Brian Goodwin
Partner, BLM Liverpool
Lighter load: declaration of non-liability is approved
Toropdar v D, High Court, 20 March 2009
Disclosure 12, November 2008, considered the encouraging judgment of Mr Justice McCombe on the
preliminary issue of whether a declaration of non-liability could be sought in a personal injury claim.
McCombe J allowed the claim to proceed as presented and gave tacit approval to declaration
proceedings being a legitimate way for an insurer to progress proceedings.
These declaration proceedings reached a final hearing before Mr Justice Christopher Clarke on 9 and
10 February 2009 and judgment was handed down on 20 March 2009. Although he did not grant a
declaration that the driver was not negligent in these proceedings, the judge confirmed that it was
legitimate for an insurer to pursue declaration proceedings, despite limitation not having expired, in the
face of a claim that was repeatedly threatened but not progressed.
Paragraphs 65-99 of the judgment are essential reading for any insurer considering declaration
proceedings.
At paragraphs 81 and 82 Clarke J says:
As Lord Woolf observed in Messier-Dowty there is no valid reason for taking an adverse view of
negative declarations, whose use domestically has expanded over recent years. ‘Subject to the
exercise of appropriate circumspection, there should be no reluctance to their being granted
when it is useful to do so’.
As to that, D (or rather his advisors) have asserted a claim but have, so far, declined to bring it.
The effect of that is that the claimant’s insurers must continue to reserve for this claim and the
claimant himself must have an allegation of negligence hanging over him for an indefinite period.
It is entirely legitimate for both of them to seek to have the court decide whether or not the
claimant is under any liability to D.
The defence argued that an injured party should not be forced to litigate and take a risk of an adverse
costs order when he had an unlimited time within which to bring proceedings at a time of his choosing
under the Limitation Act. The judge at paragraph 85 said:#
This does not mean that an injured party has an entitlement to postpone any determination of
whether he has a claim until an action begun by him at any time up to the last day of the limitation
period is concluded.
The alleged wrongdoer may in an appropriate case seek a negative declaration. As McCombe J
pointed out, in most cases an action for a negative declaration will only be brought where the
primary limitation period for bringing an action against the alleged wrongdoer has not expired. I
reject the submission that an application for a negative declaration is a collateral attack on the
policy behind the law of limitation as regards children.
Page 5
In the present case there is an asserted claim which has never been withdrawn. There is an
adequate contradictor. There is no inequality of arms. D is represented by well-known and
reputable solicitors and by leading and junior counsel; and has retained his own skilled accident
reconstruction expert. D has LSC funding. In those circumstances he has the protection against
an adverse costs order if he were to lose provided by the restrictions applicable to the making of
costs orders against LSC funded litigants. There are no grounds to suppose that any further
investigation would improve D’s position or any further information of value would become
available in the future. The relevant witnesses have for the most part been available to give
evidence. The likelihood is that the quality of any oral evidence will worsen as time goes by.
Those concerned may become unavailable, untraceable or die. That may prejudice or benefit
either party and will not be conducive to a just result. If the matter is not determined now, the
parties will be faced with the need to keep contact with material witnesses.
It was in relation to those issues that the insurer in this case sought a declaration and whilst it did not
achieve a declaration that the insured driver was not negligent to any degree, the action was successful
in finally having liability determined in a case that had been outstanding since June 2002 and might
have remained so for many more years.
To quote the judge one final time:
A declaration of non-liability would serve a useful purpose and do justice to both parties since it
would resolve, by the court’s determination, the dispute between them. Its resolution would be
consistent with the overall objective which requires – CPR 1.1(2) – that matters are dealt with
expeditiously as well as fairly. The dispute would otherwise remain in the air until the expiry of the
limitation period which, if D lacks capacity, may never expire.
In short, insurers can take this case as authority that it is entirely legitimate for an insurer to pursue
proceedings against an injured party for a declaration as to the liability, or not, of its own insured rather
than have proceedings hanging over them and their insured indefinitely.
Michael Renshaw
Partner, BLM Southampton
Berrymans Lace Mawer and Alan Jeffreys QC of Farrars Building acted for the insurer in the declaration
proceedings.
Deliberate damage and notification of a claim – recent
insurance decisions
Some recent decisions focus on issues that are both old and new. First, we have the question of how a
policy responds to damage caused deliberately by the insured but where the insured was mentally ill at
the time he did the damage. Second, we have the question of notification of a notifiable circumstance –
the question of when notification should be made is an old issue but it seems to get harder to decide
when we are dealing with increasingly complex circumstances, especially when born out of financial
schemes.
Deliberate damage by the insured
Porter v Zurich (2009) EWHC 376
The claimant sued his home insurer following the latter’s failure to cover damage after a fire in 2001. As
Mr Justice Coulson put it:
… following a series of disastrous events in his business and personal life, Mr Porter, who had
been drinking heavily and was suffering from a persistent delusional disorder, tried to kill himself
by setting fire to the property. He set a fire but, once a large part of the living area was ablaze, he
changed his mind and escaped from the property.
Typically for a property policy, the cover had an exclusion for ‘any wilful or malicious act by a member of
the family …’ and a requirement ‘… to take all reasonable steps to safeguard against loss, damage,
accident or injury’. The insurer also relied on the point that public policy is against allowing the insured to
benefit from an insurance policy for a loss intentionally caused by his own criminal act.
Page 6
Mr Porter asserted that the nature of his mental illness at the time of the suicide attempt was such that
he was not mentally capable of being in breach of the policy terms. Mr Justice Coulson considered the
law about insanity. In short, how insane does a policy holder have to be to avoid the normal policy
consequences? The answer, in short, was very insane indeed. The judge went back to what first year
law students come to understand as ‘McNaughten Rules’ which decided in the 19th century the level of
insanity necessary to avoid criminal responsibility. The judge quoted approvingly the MacGillivray
summary of the law for insurance purposes:
If the assured is so insane as not to be legally responsible for his actions, an act of incendiarism
will not prevent him recovering under the policy.
In effect, the normal terms in a property policy designed to stop an insured benefiting from a wilful or
reckless act of damage will apply unless the insured can establish that his mental impairment is such
that he either did not know what he was doing, or did not understand it was wrong. Mr Justice Coulson
did find that Mr Porter was genuinely attempting suicide and had serious mental problems. (He had
recently returned to drinking two or three bottles of wine a day and had attempted to strangle his wife
and assault others). But he did not have the necessary level of impairment to not understand what he
was doing. The evidence suggested he actually had some insight into his behaviour; he tried to let the
dog out to save it from harm (although it unfortunately died) and there was other evidence that pointed
in favour of him knowing what he was doing. So his claim for cover failed.
There are strangely few reported cases of individuals saying they were so mentally impaired that they
did not understand they were breaching policy terms. Perhaps there will be more people making this
claim in the future. After all, these are troubled times and financial and personal distress is more
commonplace. But such policy holders will not be able to succeed unless they have reached a level of
pure insanity that must be a real rarity.
Circumstances which may give rise to a claim
HLB Kidsons and Others v Lloyds Underwriters [2009] 1 Lloyd, Rep 8
This Court of Appeal (CA) decision considered whether a number of notifications of ‘notifiable
circumstances’ were adequate to comply with the claims notification condition in a professional
indemnity policy which required:
The Assured shall give to the Underwriters notice in writing as soon as practicable of any
circumstances of which they shall become aware during the period specified in the Schedule
which may give rise to a loss or claim against them.
The period of cover was 1 May 2001 to 30 April 2002. In August 2001 the insured, who were
accountants, became concerned about a range of issues arising from fiscal engineering schemes ie
various products designed to save tax. One of their tax managers had raised concerns in apparently
very firm terms which had been backed by the Scottish tax counsel. Over the following 10 months there
were four notifications to underwriters, one of which was after the period of cover expired, under a
‘deeming’ provision.
The first of the four notifications was held in the first instance decision to be ineffective. This was not
appealed but the other, later notifications, were the subject of scrutiny by the CA.
The second notification was held by the CA to be effective, although not, as far as one can see, to the
fullest extent of the claims against Kidson. What had been notified was a letter written in August 2001 by
Kidsons to their brokers along with a bordereaux of a limited number of potential claims and a general
statement that implied a potential for more claims. The letter of August 2001 had been narrowly drafted
and, the judge said, was somewhat ‘anaemic’ in the breadth of its disclosure. It referred to potential
procedural issues with one of the tax avoidance schemes.
However, the second notification and its accompanying letter went a little broader and it was taken that
even though that letter did not clearly explain what the implications were, it was accepted that the
second notification was effective to inform underwriters of the risk of all the claims concerning a
particular product known as DOS. It was not limited solely to issues arising from procedural points but
encompassed the full implications if clients made professional negligence claims about the failure of that
particular category of tax saving product. It was not, however, good enough to serve as notification of
claims in respect of a range of other ‘tax saving’ products.
Page 7
The various CA judges mused on the practical issues concerning notification of a circumstance that may
give rise to a claim:

Lord Justice Toulson observed that a mere concern that a mistake had been made, with no
other associated factors, would not of itself be a notifiable circumstance.

The courts would not be so prescriptive that they would want every circumstance notified to be
made out in great detail such as amounts to be claimed and identity of claimants.

Typical notification clauses are broad, without specifying in detail what needs to be notified
and, for that reason, a more specific clause in a policy would not necessarily enable a
policyholder to treat notification in the same way.
It should be noted that the CA also decided that notification of some claims in June 2002 (to parts of the
following market) were not made ‘as soon as practicable’ when initial concerns had arisen in August
2001 and further information was available by October 2001. This prevented cover being available
under the ‘deeming provision’ because the relevant clauses together were construed to be a condition
precedent.
Late notification – what is a ‘condition precedent’
Aspen and Others v Pectel Limited 2008 EWHC 2804 (Comm)
This case was a preliminary issue on whether notification of the claim was late and whether the policy
terms concerning notification of a claim could be regarded as a condition precedent.
The insured were specialist sub-contractors working in a tunnel in Manchester. On 29 March 2004 there
was a fire in a cross-over section. The notification clause in the policy required the insured to give
underwriters’ agents:
Immediate written notice with full particulars of any occurrence which may give rise to indemnity
under this insurance.
The court was concerned with whether the occurrence was one which could be said may give rise to
indemnity. The court accepted that this meant a real risk of a requirement for underwriters to indemnify
rather than just a ‘fanciful risk’. The claim was not, in the event, notified to underwriters until March 2007
although the insured had received a formal letter of claim. Had the insured been right to work on the
basis during the last three years of there being no real risk of a claim?
The answer was no. Various events after the fire, especially immediately after the fire, should have put
the insured on notice of a risk of a claim that:
Was one which would have been recognised by a reasonable man having the knowledge that
[the insured’s relevant employee] possessed.
The insured had been told immediately after the fire that there was probably nothing to worry about but
not long after enquiries were made by the main contractor about a piece of equipment, training records
of the insured’s employees and a method statement. Later, in August 2004, enquiries were made about
the materials the insured had used and eventually in late October a request was made for solicitors to
interview the insured’s employees. From this the insured should have concluded that there was a real
risk of a claim even though the insured did think that the essence of the claim against it was ludicrous.
It is often not much use to insurers to assert late notification unless the notice clause can be viewed as a
condition precedent to liability. In this case, that was contested. The notification clause made no
reference to it being a condition precedent, or to compliance with it being a condition of insurers being
liable. However, a general condition provided that it was a condition of the underwriters being liable in
respect of a claim that the insured observed the terms and conditions of the insurance, one of which
was, of course, the claims notification clause. The court decided that, on this occasion this general
clause was sufficient to make compliance with the notification clause a condition precedent to liability.
Therefore, given that the court had decided that notification of the ‘circumstance’ was late, the insurer
was not liable to pay the claim.
This approach was taken despite the insured advancing the usual arguments that a general clause
making compliance with all the conditions of the policy, condition precedent to liability makes no sense
with some of the type of clauses with which the insured would then have to comply. However, the court
Page 8
also made the point that whether or not a clause is a condition precedent needs to be considered on the
basis of the construction of all the relevant terms in the policy.
The obvious, commonsense conclusions from these cases are:
1 Insureds, with brokers, should give careful consideration to notification of claims, identifying
when certain facts might result in a claim even if they believe such a claim to be unlikely to be
successful or unjust. This is particularly so where circumstances have to be notified that ‘may
give rise to a claim’ because it is not hard for underwriters to assert that where there has been a
dramatic event like a fire, as in Aspen, or concern about the failure of a product which might give
widespread unhappiness, as in Kidsons, that there was a notifiable circumstance.
2 The question of whether a claim may arise needs to be considered objectively, taking into
account the facts known by the insured. The insured should not decide to not notify based on his
own view that the claim has no prospects.
3 Kidsons shows the need to give careful thought to the ambit of the notification. The insured
understandably does not want to overplay the risk of a claim but must not underplay it so much
that it cannot be appreciated what the claim is likely to be – a narrow, ‘anaemic’ notification may
result in something crucial being left out and therefore not covered.
4 Both cases show that a condition in an insurance contract does not have to use the magic
words ‘condition precedent’ to gain condition precedent status. If a construction of the relevant
clause, possibly with others in the policy, adds up to the position that compliance with the
notification (or any other) clause is vital for policy liability to arise, then the clause is a condition
precedent and no amount of arguing that the insurers have not been prejudiced by late
notification will help as far as the law is concerned. The judges are less shy than one might think
about finding clauses to be conditions precedent not least because of the risk of policy cover
otherwise becoming open-ended.
Catherine Hawkins
Partner, BLM London
The reasonable driver
In Michael James Stewart (protected party by his litigation friend Christopher Ramwell) v David William
Glaze, in a judgment handed down by Mr Justice Coulson on the 7 April 2009, the standard of the
reasonable driver was examined in this road traffic accident case where the claimant unfortunately
sustained catastrophic head injuries.
The facts
It was a typical Friday night/Saturday morning in September 2004. Mr Stewart, and his good friend Mr
Marfleet, both young men in their 20s, went out drinking. They had both consumed between 5 – 7 pints.
Mr Stewart was looking forward to moving into Mr Marfleet’s flat the following week; Mr Marfleet was
eagerly anticipating his game of rugby the following day.
Sometime in the early hours of Saturday morning, they returned home, got off the bus and for reasons
which were never explained, sat down at the bus stop before going home. The defendant, Mr Glaze,
spent the early part of that Friday evening with his wife and daughter and then had gone to visit his
sister; as was usual on a Friday night. In the early hours of Saturday morning he was returning home.
He was driving carefully, unhurried and without distraction at about 30mph. He saw the bus stop and
was aware of people sitting within it. What happened in the ensuing 1 – 2 seconds, was, as Mr Glaze
put it and Mr Justice Coulson agreed, every driver’s worst nightmare and had a profound effect upon the
life of Mr Stewart and his family.
As Mr Glaze approached the bus stop, for some inexplicable reason, Mr Stewart got up from his seat
within the bus stop, walked to the edge of the road and then ran at an angle directly towards Mr Glaze’s
car. At the point Mr Stewart entered the roadway the court found that Mr Glaze had approximately one
second within which to take any evasive action. Mr Glaze did his best; he swerved and then braked to
try to avoid the collision. Sadly yet inevitably, an impact occurred, leaving Mr Stewart with catastrophic
head injuries, remaining in a persistent vegetative state.
The law
Page 9
What is the standard of the reasonable driver? Mr Justice Coulson underlined that it was important to
ensure that the court does not unwittingly replace that test with the standard of the ideal driver and
reinforced the observations of Mr Justice Laws in Ahanonu v South East London and Kent Bus
Company Limited (2008) who said:
There is sometimes a danger in cases of negligence that the court may evaluate the standard
of care owed by the defendant by reference to fine considerations elicited in the leisure of the
court room, perhaps with the liberal use of hindsight. The obligation thus constructed can look
more like a guarantee of the claimant's safety than a duty to take reasonable care.
Whilst accepting that it is important to have in mind that a car is ‘potentially a dangerous weapon’ (as
per Latham LJ in Lunt v Khelifa (2002)) Mr Justice Coulson found that Mr Glaze was not negligent.
Expert evidence
Both parties had disclosed accident reconstruction evidence. The defendant’s approach was to examine
the factual evidence – there were only two lay witnesses, Mr Glaze and Mr Marfleet – and then to test
whether that evidence was inconsistent with the forensic evidence available at the scene. Significantly,
Mr Glaze had maintained throughout that the claimant was running towards his car at the point of
impact.
The claimant, through his expert witness, preferred to speculate on what might have occurred prior to
impact and put forward a number of possible scenarios, that the claimant was either walking, running or
stationary at the point of impact.
The court was not impressed with this approach. Mr Justice Coulson underlined that it is the primary
factual evidence which is of the greatest importance in a case of this kind. Whilst recognising that
accident reconstruction expert evidence can be useful to test the factual evidence and inferences to be
drawn from it, he said:
It is, however, very important to ensure that the expert evidence is not elevated into a fixed
framework or formula against which the defendant’s actions are then to be rigidly judged with a
mathematical precision.
This assessment of the expert evidence also impacted on the approach adopted by the court when
assessing the standard of the reasonable driver. As the claimant’s expert had put forward possible
scenarios to include what the defendant could have done, this was not the appropriate course. In this
instance, the claimant’s case depended, as it had to, on the unspoken assumption that Mr Glaze should
have been watching Mr Stewart as he walked towards the kerb and as he stepped off the kerb,
essentially excluding all other considerations.
In my judgement that is not a realistic scenario; it is not applying the standard of the reasonable
driver; and it elevates what might have happened into an assumption of what should have
happened.
Causation
The claimant’s secondary case was that Mr Glaze could and should have slowed down before he struck
Mr Stewart, as he had time to do so if he had been watching Mr Stewart from within the bus stop.
Having found the defendant was not negligent on the primary case and that it was unreasonable to
expect Mr Glaze to have watched the claimant exclusive to all other considerations until he became a
hazard within the roadway, Mr Justice Coulson went on to deal with the secondary case. He found that
there was no evidence to suggest that on the balance of probabilities, Mr Stewart would have suffered
any different or lesser injuries. The claimant’s case depended upon the evidence of the accident
reconstruction expert who asserted that Mr Stewart’s injuries would have been less severe, based upon
general statistical evidence.
Finally, and for good measure, if contrary to his findings on the primary and secondary case that the
defendant was not liable for the claimant’s injuries, Mr Justice Coulson considered the issue of
contributory negligence and concluded that the collision was the principal responsibility of Mr Stewart
and that would have been reflected in a reduction of 75% for his actions, had primary liability been
found.
Comment
Mr Justice Coulson’s analysis of recent cases and the approach to be adopted by the court in assessing
the standard of the reasonable driver will be welcome news to motor liability insurers who must at times
Page 10
feel that there is all but strict liability in RTA cases, particularly where a claimant has suffered severe
injury.
The court’s finding that it was the primary factual evidence which is of the greatest importance is a
helpful reminder to all of the role of accident reconstruction evidence in such cases. The lengthy
analysis of experts in cases involving events that occurred over a period of no greater than two seconds,
together with the conclusions to be drawn from that analysis, very often clouds the primary factual
evidence and can take precedence if not carefully controlled.
On a cautionary note, the party with the burden of proving causation should be aware not to rely upon
general statistical evidence in support of their case without further consideration to obtaining specific
medical evidence.
In borderline cases, the judge’s finding of contributory negligence for the actions of the claimant in this
case may also assist, providing an illustration of what is often regarded as the general rule that it is rare
for a pedestrian to be found more liable than a driver (Eagle v Chambers (2003)). In conclusion, we
must remind ourselves and reflect upon the awful consequences of those 1 – 2 seconds for Mr Stewart
and his family whilst recognising that accidents sometimes do happen without a party bearing legal
liability.
Val Jones
Partner, BLM Manchester
Berrymans Lace Mawer acted on behalf of the defendant.
Insurance contract law reform: what you need to know
Time for reform in England and Scotland
The Marine Insurance Act 1906 attempted to codify the common law on insurance. The process took
around 25 years so the Act is very much a creature of the 19th century. Society, the economy and
cultural attitudes are all very different today: the law now needs reform.
It might appear certain on paper but in practice it can be anything but. In seeking to do justice the courts
have often reinterpreted either the law or the facts, leaving us with ‘unknown unknowns’. Outdated law
also creates pressure to design alternative ways in which to resolve disputes. Consumers now rely more
on the approach of the Financial Ombudsman Service (FOS), than they do on the law.
The first consultation paper
Both of the law commissions are keen to consult widely on what the law should be. The first consultation
paper, published in 2007, focused on misrepresentation and non-disclosure by the insured.
For consumers, the FOS approach was largely adopted. It was proposed that consumers should not
have an obligation to volunteer information and instead must answer the insurer’s questions honestly
and reasonably.
If the consumer acts reasonably, the insurer should pay the claim. However, if a consumer acts
deliberately or recklessly, the insurer should continue to be entitled to avoid the policy. Where the
consumer has been negligent then the outcome will depend on what would have happened if the correct
information had been provided: if for example, the insurer would have charged double the premium, the
insurer only need pay half the claim.
A different approach for business is recommended.
The commissions recognise that businesses differ greatly in size and type, are often advised, and can
have a level of sophistication unavailable to consumers. Therefore, perhaps a residual duty of disclosure
should be retained.
The consumer proposals are mandatory but the business proposals are to be a default regime, with the
possibility to contract out of the Act. However, it is suggested that the ability to contract out should be
limited where the policy was written on the insurer’s standard terms.
The responses received
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We received 105 responses, many of them very detailed. The overwhelming majority of consultees
supported the need for reform, particularly for consumers. Almost everyone agreed that the duty of
disclosure should be abolished for consumers. Consultees considered that as ‘risk professionals’,
insurers should ask appropriate questions. In response, a new draft consumer bill on non-disclosure and
misrepresentation is being prepared, to bring the law and the FOS approach into line, and set out a
clear, accessible statement of consumers’ duties and insurers’ remedies.
For business insurance, consultees generally accepted that the situation was more complex, and
agreed that a duty of disclosure should be retained. Many also supported the concept of proportional
remedies where the insurer’s obligations to pay are matched against the policyholder’s actions when
proposing for insurance.
It was argued that the ‘all or nothing’ remedy of avoidance was often inappropriate.
For business insureds, it was proposed that if the insurance were written on ‘standard terms of
business’, any terms which purported to be less favourable to the insured than the default regime would
be invalid unless such terms met the ‘reasonable expectations’ of the policyholder. Whilst agreeing with
the principle of protection for small businesses, many consultees expressed concern as to how
‘standard terms’ would be defined in practice. There was also widespread concern or misunderstanding
as to what was intended by ‘reasonable expectations’. These proposals are being reconsidered, to
consider alternative ways of protecting the very smallest businesses, many of whom buy insurance
online in the same way as consumers.
Intermediaries
One of the most intractable issues in insurance law is what should happen when an intermediary
introduces a misrepresentation into an insurance application – either by giving bad advice, or
transcribing incorrect information onto the form. The answer depends on whom the intermediary was
acting for. If the intermediary was acting for the insurer, the insurer is responsible for their actions and
must pay the claim. If the intermediary was acting for the insured, then the insurer may turn down the
claim, leaving the insured to sue the intermediary. In a world which is constantly inventing new forms of
selling insurance (such as aggregator sites or ‘white labelling’), it is often difficult to know whom the
intermediary acts for at any given time.
In the consultation paper, it was proposed that the answer should depend on whether the intermediary
undertook a fair analysis of the market. Most people disagreed with this test, arguing that the concept
was too vague. Current thinking is that a number of basic principles could be set out within the
legislation (based on common law agency principles), without attempting to create a single bright line to
test who an intermediary acts for.
Next steps
Several papers are planned in the next few months, including a fuller explanation of the policy on
intermediaries, and an issues paper on the needs of micro-businesses. Publication of the intended Bill
on consumer insurance is due by the end of 2009.
In 2010 a second consultation paper is planned, covering insurable interest, post contractual duties of
good faith and damages for late payment of claims.
Finally
Insurance is something the UK does well and it is a very important part of the economy. Reinsurance is
one of the UK’s biggest exports. The commissions consider that there is evidence to show that some
parts of the current law have the potential to cause long term harm to an industry based on trust.
Nevertheless, the commissions are concerned to ensure that the changes they are proposing do not
have unintended negative consequences. The proposals will therefore be amended to incorporate
consultees’ responses, particularly for business insurance.
Our 300 years of tradition and the size of the UK market should encourage the UK to take a global lead
and regard a review of insurance law as an opportunity to support the sector. The review should set the
agenda for the current century as the 1906 Act did for the previous.
David Hertzell
Law commissioner,
The Law Commission (England)
Page 12
Further details may be found through the Law Commission and Scottish Law Commission web sites at
www.lawcom.gov.uk and www.scotlawcom.gov.uk
Shots in the dark: applying Ogden 6
There have been a number of revisions since the 1st edition of the Ogden Tables in 1984. In the past
decade, courts have grown used to employing the Ogden Tables to perform calculations to determine
projected loss of future earnings. Nonetheless, the question remains as to how effectively the changes
in the latest edition have been implemented in practice.
Ogden 6 was introduced in 2007, with the aim of updating the underlying methodology behind the data,
and in order to introduce reduction factors which account for contingencies other than mortality, such as
education and disability. Whereas the value of mortality used by the Ogden Tables was continually
updated in each of the previous editions, the reduction factors remained almost unchanged until the 6th
edition. It was hoped these changes would bring about awards which more accurately reflected the likely
future loss of an individual.
Non-mortality contingencies
The introduction of reduction factors to account for nonmortality contingencies has not been a troublefree process
These difficulties are highlighted by the inclusion of multipliers for disability. This is measured as a
dichotomous variable – either an individual is disabled, or they are not. Disability is defined in the 6th
edition according to the Labour Force Survey definition. This is different to the definition used in the
Disability Discrimination Act 1995 and leaves some scope for the courts to engage in debate over the
precise meaning of disability.
Dr Victoria Wass is a member of the research team responsible for introducing the factors for nonmortality risks. She acknowledges disability is a problematic variable, noting that ‘it is difficult to define
and impossible to measure accurately’. As a result of the confusion surrounding the reduction factor for
disability, courts are increasingly applying their discretion to determine the final level of an award.
In the explanatory notes to the 6th edition, the Ogden Working Party noted that:
In many cases it will be appropriate to increase or reduce the discount in the tables to take
account of a
particular claimant’s disabilities.
The role of the tables therefore is to provide a ‘ready reckoner’, to allow courts to take a figure and
adjust it according to the circumstances of the particular case. Discretionary adjustment is permissible
and indeed necessary under the 6th edition. One question is: are courts taking this flexibility too far?
Judicial application
There is increasing evidence that courts are looking well beyond the figures set down in the 6th edition,
in favour of the evidential arguments in each case. One example of this arose in Garth v Grant & Motor
Insurers Bureau LTL, (QBD, Unreported) 25 May 2007. The claimant had been involved in a road traffic
accident and sustained serious injuries. The defendant put forward an argument that the claimant’s
morbid obesity represented a disability and as such, her loss of future earnings should be adjusted
downwards accordingly. The court rejected this argument on the basis that the claimant’s weight did not
impair her ability to carry out her work in international banking.
A similar approach was taken in Conner v Bradman [2007] EWHC 2789.
The claimant was working as a mechanic when he suffered a serious knee injury. Subsequent to the
accident, he decided to retrain as a taxi driver. In order to take the impact of the injury into account when
considering a future alternative career, the judge decided to split the difference in reduction factors
between disabled and nondisabled. This produced a net loss of earnings of just over £86,000 which, as
Dr Wass has noted, is virtually identical to what the claimant could have expected to recover under the
previous Smith v Manchester approach.
Life expectancy
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A further criticism can be levelled at the way judges have avoided making decisions when it comes to
data for mortality assumptions. Whilst there has been a general willingness to adjust figures in terms of
work life expectancy, courts have stayed away from discussing overall life expectancy.
This is far from uniform, and can be illustrated by one stark example. Travelling east from central
London on the Jubilee underground line, the difference between life expectancy in Westminster (78) and
Canning Town (71) represents an average drop of nearly one year per stop. North of the border in
Scotland, the Calton area of Glasgow has an average life expectancy of just 54 compared to 82 in
nearby Lenzie, East Dunbartonshire.
Conclusion
Judges have been eager to intervene to adjust figures where they feel there is an intuitively ‘right’
answer, such as in the case of disability. However, a lack of understanding of factors such as life
expectancy may lead to distortions and inconsistencies in the level of awards.
It is to be hoped that some consistency will emerge once courts become more accustomed to relying on
the 6th edition reduction factors for contingencies other than mortality. However, for the time being, it
seems likely that judicial discretion, tinkering, and pulling figures out of the air, will continue.
Jennette Newman
Partner, BLM London
Overcoming the barriers to rehabilitation
Rehabilitation has developed in fits and starts since it was introduced a decade ago. Whilst it has moved
centre stage in terms of government policy, insurers still disagree on how it can be used to achieve the
best results.
Prior to the introduction of rehabilitation in the Personal Injury Pre Action Protocol, accident victims had
to operate within a system of litigation which severely restricted their ability to seek payment for
treatment before the final outcome of a trial. According to the Bodily Injury Claim Management
Association (BICMA), the injured party often suffered ‘a significant diminution in their quality of life for a
considerable time’.
Rehabilitation has been defined by the Association of British Insurers (ABI) as ‘a process of active
change by which a disabled person achieves optimal physical, psychological and social function’. The
injured party receives treatments, ranging from straightforward physiotherapy to more complex
assistance with care, aids and appliances in catastrophic injury cases. The aim of treatment is to assist
an injured party to return to work or at least gain some semblance of normality following an injury.
The key question for insurers is how they can use rehabilitation to reduce their costs. There is still
significant disagreement in the industry about how to achieve real savings. Four key barriers currently
prevent full acceptance of rehabilitation by insurers and lawyers.
First, there is a relative lack of reliable empirical data to hand when it comes to the benefits of
rehabilitation. So far the best available study is that carried out by the Vocational Rehabilitation Task
Group (VRTG) in 2007. The group considered 450 different studies published between 2000 and 2007
from around the world that tested the effectiveness of different strategies. The conclusions are broadly
positive towards rehabilitation, noting that the review ‘has demonstrated that there is now a strong
scientific evidence base for many aspects of vocational rehabilitation’.
In June 2004 AIG Europe reviewed 30,000 cases and discovered an average drop of 20% in claims
costs where rehabilitation was provided. However, a survey by Fortis showed that for minor whiplash
injuries, physiotherapy lengthened the average claim time from 259 to 275 days and increased costs by
£1135 per claim. Further study is needed in order to determine how to obtain the optimum benefit from
rehabilitation.
Second, it can be tricky to encourage collaboration within an adversarial climate, especially where
liability is not admitted. The ABI has argued that ‘relations between insurers and claimant lawyers have
improved significantly over the past five years, but mistrust remains one of the main barriers to effective
rehabilitation. This view is supported by BICMA, who state in their guidance notes to the Rehabilitation
Code that, ‘collaboration delivers the best chance of a favourable outcome’. There is a clear benefit for
the claimant in determining liability as early as possible to ensure closer collaboration.
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The third difficulty comes from the variation in standards between the various providers who have
sprung up to fill the gaps in provision left by the NHS. A perceived variation in the standards of service
provided by private-sector rehabilitation providers, still deters some in the industry from fully embracing
it in the early stages of the claims process. Tighter regulation may prove necessary in order to remedy
the problems faced by insurers trying to differentiate between providers.
Finally, as with any standard course of medical treatment, there will be a natural failure rate in treating
injuries through rehabilitative methods. This is especially prevalent in cases where there is a mental as
well as a physical element to the injury. The ABI has argued that ‘there is an urgent need to improve
vocational rehabilitation interventions for mental health problems, which are now the largest and fastest
growing cause of long-term incapacity’.
One of the major reasons behind this failure rate is down to non-compliance by patients with their
treatment programmes. One study estimated that this accounted for the failure of some 23% of
rehabilitation cases. One way of reducing this figure could be to strengthen the wording of the pre action
protocol to allow courts to issue sanctions for non-compliance with the rehabilitation process. Amending
the protocol to improve the enforcement mechanism in this way would send a strong message in favour
of co-operation to all parties involved in the process. The 2007 ABI survey of insurers and claims
handlers, found that:
Insurers see clear financial benefits in high value cases. In lower value claims (eg whiplash)
their attitudes vary. Insurers that embed rehabilitation into the corporate culture and educate
their staff accordingly gain most from it. Those that take a less systematic or more passive
approach have found the financial rewards more elusive.
If the full benefits of rehabilitation are to be achieved, it is crucial that all parties involved in the claims
handling process work together to overcome these barriers.
Jonathan Edwards
Partner, BLM London
H&S breach could now put you behind bars
Over the past year there have been huge changes to health and safety legislation. The Corporate
Manslaughter and Homicide Act came into force in April 2008, followed by the Health and Safety
(Offences) Act (the Act) which became law on 16 January 2009. Interestingly, following the fanfare of
publicity that accompanied the new Corporate Manslaughter Act 2008, there has been a muted
introduction for the offences Act.
This is surprising given that the Act introduces the realistic possibility of individuals being imprisoned for
breaches of the Health and Safety at Work etc Act 1974 (HSWA) and is likely to affect far more
businesses than potential manslaughter charges.
The Act is another push toward increasing fines imposed for breaching health and safety offences,
which have long been criticised as too low by the government, courts and the HSE.
Amendments
The Act raises the maximum penalties for certain health and safety offences, namely to:
a Raise the maximum fine imposed by lower courts to £20,000 for most health and safety
offences.
b Make imprisonment an option for more health and safety offences (the maximum term of
imprisonment is two years).
c Make certain offences, which are currently triable only in the lower courts, triable in either the
lower or higher courts (where fines are unlimited).
Application in practice
Like the Corporate Manslaughter and Corporate Homicide Act before it, no new duties are created by
the Act. Instead, it is a continuation of the move towards the imposition of higher fines in health and
Page 15
safety cases, with the additional prospect of imprisonment for individuals convicted of offences under
the HSWA.
The HSE has made it clear that the enforcement policy will target ‘those who cut corners, gain
commercial advantage over competitors by failing to comply with health and safety law and who put
workers and the public at risk’.
Prison sentences are therefore likely to be reserved for particularly serious breaches of health and
safety law where a number of features are present. In HMA v Transco (Court of Session 25/8/2005) the
court stated that the case involved much more serious long term failures in comparison with the number
of other health and safety cases in England. It is clear that the legislators intended for a custodial
sentence to be given for breaches such as those found in Transco. What remains to be seen, however,
is how the Act will affect other injury and fatal cases which may not reach the level of Transco but which
are nonetheless serious. The guidance in respect of sentencing for the Act is eagerly awaited.
Who is affected?
It is not only directors and managers who need to be conscious of this new legislation. Any employee
can be prosecuted for a breach of section 7 HSWA, which places a general duty on employees to take
reasonable care for the health and safety of themselves and others who may be affected by their acts,
or omissions, at work. In addition, under section 37 HSWA, senior managers and directors will be guilty
of an offence if it can be proved that an offence was committed with their consent or connivance, or was
attributable to some neglect on their part, and these individuals could now face imprisonment.
Heavy fines are clearly something that organisations will wish to avoid, particularly as they may already
be suffering in the current economic downturn. The temptation is that during these times, businesses
spend less money ensuring that health and safety requirements are adhered to (see page 24). On the
contrary, it is now more important than ever that companies and individuals are not tempted to put profit
before safety.
Possible challenges
There is some debate over whether the Act will lead to challenges in relation to breaches of human
rights. The most common offences that organisations are prosecuted for are breaches of section 2 and
section 3 HSWA. Pursuant to section 40 HSWA, a reverse burden applies to both sections, meaning
that once a risk has been established by the prosecution, the burden shifts to the accused to show that it
was not reasonably practicable to do more than was actually done. The Court of Appeal considered that
the reverse burden of proof was acceptable because health and safety offences were not ‘truly criminal’
(R v Janway Davies). As a result of the introduction of the Act there is now a question mark over
whether making imprisonment a penalty for an offence to which this reverse burden of proof applies
could contravene article 6 of the European Convention on Human Rights, namely the right to a fair trial.
Conclusion
During the third reading of the Act, Lord McKenzie stated that ‘good employers and diligent managers
and directors have nothing to fear; indeed they have much to gain as the Act tackles the commercial
advantage that unscrupulous businesses gain from non-compliance’. Rather the Act is a warning to
those businesses who still do not take their health and safety responsibilities seriously.
The impact of the Act remains to be seen as sentencing will be a matter solely for magistrates and
judges, who are without precedent and are yet to receive any guidance from the Sentencing Guidelines
Council. However, financial penalties may rocket as fines based on a percentage of an organisation’s
average turnover are being considered, and the message to organisations and individuals is that the
cost of non-compliance, both financially and in terms of liberty, is greater than ever before.
Atiyah Malik
Partner,
BLM Manchester
BLM’s Safety, Health and Environment 24 hour helpline has been created to handle major incidents,
offering an immediate response. Contact 07972 999 999.
Marper – the end of the road for the UK DNA database?
The European Court of Human Rights (ECHR) handed down judgment in S & Marper v The United
Kingdomon 4 December 2008. Mr S was aged 11 when he was arrested and charged with attempted
Page 16
robbery. His fingerprints and DNA samples were taken. He was subsequently acquitted. Mr Marper had
been arrested and charged with the harassment of his partner. His fingerprints and DNA samples were
also taken. Before a pre-trial review took place, he and his partner were reconciled. The charges were
not pressed and the case was formally discontinued.
Section 64(1A) of the Police and Criminal Evidence Act 1984 as amended by the Criminal Justice and
Police Act 2001 provides that:
… fingerprints or samples may be retained after they have fulfilled the purposes for which they
were taken but should not be used by any person except for purposes related to the prevention or
detection of crime, the investigation of offences, or the conduct of a prosecution …
Both Mr S and Mr Marper asked the police to remove their DNA samples from the database. They
claimed that their Article 8 rights had been infringed.
Article 8 states:
1 Everyone has the right to respect for his private … life …
2 There should be no interference by a public authority with the exercise of this right except such
as is in accordance with the law and is necessary in a democratic society … for the prevention
of disorder or crime … The police refused. Mr S and Mr Marper challenged the decision in the
Administrative Court but were unsuccessful.
The case proceeded to the Court of Appeal where Lord Justice Sedley stated:
the purposes of retention – the protection of others and the protection of the right of others to be
free from crime are four square within Article 8(2) and are therefore provided for by law.
The House of Lords unanimously found against Mr S and Mr Marper. Lord Steyn was of the view that
the mere retention of fingerprints and DNA samples did not constitute an interference with the right to
respect for private life and that, even if he were wrong in that view, any interference was very modest
indeed. Lord Brown went so far as to say:
My concern is simply to indicate how very clear a case this seems to me to be. Indeed my only
real problem now, following full investigation of the case with the assistance not only of the
parties but from liberty too, is in discerning any coherent basis on which the challenge can still be
sustained.
The ECHR examined the relevant European legislation and the approach taken by other European
countries.
The UK was the only member state to expressly permit the indefinite retention of DNA profiles and
cellular samples of persons who had been acquitted or in respect of whom criminal proceedings had
been discontinued.
The ECHR found that the retention of DNA samples, DNA profiles and fingerprints constituted an
interference with the right to respect for private life. Whilst the ECHR accepted that the measures
pursued a legitimate aim, the court noted that:
England, Wales and Northern Ireland appear to be the only jurisdictions within the Council of
Europe to allow the indefinite retention of fingerprint and DNA material of anyperson of any age
suspected of any recordable offence.
The court attached considerable importance to the practice in other states (which all provided for this
type of material to be deleted, although some states permitted exceptions in specific circumstances).
The ECHR said that it was ‘struck by the blanket and indiscriminate nature of the power of retention in
England and Wales’.
The court found that this blanket retention failed to strike a fair balance between the competing public
and private interests and that the UK had overstepped any acceptable margin of appreciation in this
regard. Retaining this material accordingly constituted a disproportionate interference with the
applicants’ Article 8 rights.
Page 17
The potential impact of this decision is very significant indeed. The current system has been found to
breach the Article 8 rights of those who have been acquitted or against whom proceedings have been
discontinued and the indication from the judgment is that, even in relation to convicted persons, the
blanket retention of this material without any subjective review will also be a breach of Article 8.
The government has set up a consultation to review the retention of DNA material and fingerprints and
has indicated that there will be a White Paper on Forensics during the course of 2009.
It is unlikely that the government will revert to the old regime whereby this material was removed from
the database. In the circumstances, it would appear that the most likely outcome will be that the
government will introduce new legislation setting out criteria to be applied to the retention of this material
(to include, for example, the nature and seriousness of the offence, previous arrests and the strength of
the suspicion against the individual) together with a system for independent review. This will
undoubtedly lead to individuals challenging decisions to retain their fingerprints or DNA material.
This decision also has profound implications for the proposed national DNA database and it is hard to
see any basis upon which a compulsory DNA database for the entire population will be achievable in
circumstances where a database targeted at the prevention of crime/the protection of individuals from
crime has been held to interfere with Article 8 rights.
Tim Smith
Partner, BLM London
Prevention is always better than cure
New regulations mark the implementation of the Environmental Liability Directive (ELD)
The ELD has finally been implemented and as a result The Environmental Damage (Prevention and
Remediation) Regulations came into force in England on 1 March 2009. Many of you will be aware that
the impending implementation has been anticipated for the last three years as originally the Directive
was due to be transposed into UK law by 30 April 2007!
There are separate regulations for Northern Ireland, Scotland and Wales which also come into force
during 2009.
The regulations, like most ‘pollution’ legislation in England and Wales, are based on the ‘polluter pays’
principle, so that those responsible for pollution are charged with the cost of preventing or remedying
environmental damage.
Key features
It should be remembered that ‘environmental damage’ has specific meaning within the regulations and
that it covers only the most serious cases. Therefore, the existing legislation for provision of
environmental liability remains in place. The regulations provide that in the first instance the ‘operator’ is
presented with the responsibility of identifying when there is an imminent threat or actual damage and is
obliged to take immediate action. As always, the regulations are there as a ‘fall back provision’ the
emphasis should be on putting in place appropriate prevention measures so that environmental damage
does not arise.
Operators
As mentioned earlier, the principle behind the regulations is that operators will become financially liable
for environmental damage caused by their activities so that clean up costs will not be borne by the tax
payer. The regulations will only apply to environmental damage that has been caused after 1 March
2009 which effects the following:
1 Ground or surface water.
2 Land.
3 Protected species, natural habitats or SSSI
(Site of Specific Scientific Interest).
There are of course exemptions which are set out in the regulations.
Duty to notify
If environmental damage does occur, the operator is obliged to inform the relevant authority eg
Environment Agency, local authority etc and take immediate steps to appropriately control, contain,
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remove or manage the pollution. Thereafter, the relevant authority will determine whether environmental
damage has occurred and what remedial measures are required. This decision can be done via
consultation with the operator and relevant third party.
Thereafter, a remediation notice will be served and the operator will then be responsible for completing
the clean up and failure to do so will be a criminal offence.
The emphasis is that there is a positive duty on the operator to notify the relevant regulatory authorities.
As a result, regulatory authorities can require operators to revise their operational policies. At present,
there is no available list or criteria for operators to judge their actions and commentators are uncertain
as to whether the test is objective or subjective to decide whether an operator has absolved itself in the
duty to notify.
Penalties
The penalties for an offence under the regulations are a fine (maximum £5,000) in the Magistrates Court
and/or up to three months imprisonment or an unlimited fine and/or up to two years imprisonment in the
Crown Court. With regards to ‘clean up’, the operator is liable for any costs incurred in serving notices,
assessing damage, identifying and pursuing the operator; in effect almost any costs associated with the
clean-up and enforcement.
Appeals
An operator is able to appeal against the notification of environmental damage within 28 days. The most
likely grounds of appeal, are that the damage is not ‘environmental damage’, or that there is no causal
link between the activity and damage. There are also ‘permit defences’ available where it is a defence if
damage is caused under express authorisation under the regulations. Most interestingly, there is also a
‘state of the art defence’ which allows environmental damage to be judged according to the state of
scientific and technical knowledge at the time. This will no doubt become a fertile field for environmental
consultants and experts.
As mentioned earlier, the regulations are not retrospective and will not apply to damage caused by
incidents which occurred before the regulations come into force. The regulations will not apply to
damage which is caused by an incident that took place 30 years or more before the damage.
Remediation – a new regime!
The reason the regulations have caused such excitement is because they do go further than existing
legislation through enforcement in that they can enforce the following remediation measures as a result
of environmental damage under the regulations:
1 Primary remediation – these are measures to restore the damage (eg traditional clean up
measures).
2 Complimentary remediation – these are measures which will be undertaken which can include
remediation to other sites to compensate where primary remediation is unable to fully restore
the damage.
3 Compensatory remediation – these are measures to compensate for the loss of natural
resources while the damage has been restored.
Note that the above places emphasis not only on remediation but also compensation of any loss of
natural resources.
Points 2 and 3 directly above are obviously of concern for companies and their insurers in as much as
businesses may be obliged to compensate in areas which are not related to the actual incident or loss
caused by environmental damage. Whilst it is relatively easy to see how an insurance policy will
indemnify in respect of primary remediation, complimentary and compensatory remediation are areas
which may well give cause for concern.
Insurance
The ELD does not require member states to make environmental liability insurance or other financial
security mandatory for operators. However, article 14 does require member states to encourage the
development of appropriate financial security instruments and markets, the aim being to enable
operators to use financial guarantees to cover their responsibilities. Some member states when
implementing the directive have made environmental liability insurance compulsory for operators.
However, at present it is unlikely that mandatory insurance will become a possibility in England and
Wales and it has not been contained in the regulations.
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The issues concerning Bartoline highlight the fact that it is unlikely that public liability policies will cover
all responsibilities under the regulations. This case held that the remediation costs owed to the
Environment Agency and costs incurred in relation to compliance with remediation notices were outside
the scope of the relevant public liability policy. Whilst it has to be acknowledged that general liability
policies may cover some of the liabilities under the regulations, coverage is uncertain and operators will
need to look at their own individual policy wording. SME’s in particular should give proper consideration
to a review of their insurance policies.
Some environmental impairment liability insurers have already shown that they are willing to extend
policies to cover liabilities under the regulations, although it is advised that operators closely review the
legislation to ensure that they are being provided with the cover that they require. Obviously, the
regulations do provide a new business opportunity for insurers, and as mentioned the specialist
impairment insurers at present appear to be leading the way.
Michael Salau
Partner, BLM London
Bartoline case
In 2003, Bartoline (a small company manufacturing adhesives and packing hydrocarbons) had a fire.
The resulting chemical and fire-foam mixture leaked into two river systems owned by the Environment
Agency.
The EA issued Bartoline with a £600,000 clean-up bill. When Bartoline made a claim under the public
liability policy, the court found that in reference to the policy ‘damages’ did not cover clean-up costs.
Insurers in credit hire tug of war: intervention and failure to
mitigate
‘Round 4’ of the battle between insurers and credit hire organisations took place in 2008. Enforceability
arguments have diminished following on from Giles, Dimond and Clark. Insurers have now adopted an
‘if you can’t beat them join them’ stance and have turned to offering their own replacement vehicles as
their latest step in the ‘war’.
Two high-profile cases which have come before the courts in
order to determine what, if any, hire charges are recoverable
where the third party insurer offers a replacement vehicle,
are Steadman v TNT Express Limited and the conjoined
appeals of Copley v Lawn and Madden v Heller.
Intervention
Steadman v TNT Express Limited
The claimant was involved in a non-fault accident and at the accident scene the driver responsible
handed her a card offering ‘a replacement vehicle free of charge’.
The claimant passed the card to her brokers without reading it, who in turn made no enquiries as to the
offer. The claimant subsequently hired a replacement vehicle from Helphire. Proceedings were brought
against the claimant in relation to unpaid hire charges.
At first instance it was found that the defendant’s offer was a genuine scheme which would have
provided the claimant with a second car cost free. The claim was dismissed, concluding that the hire
costs had been incurred as a result of her/her broker’s decision and she had failed to mitigate her loss in
its entirety. The claimant appealed on the grounds that the judge was wrong to extinguish the claimant’s
claim and ought to have held that the claim was abated to the cost incurred had the claimant accepted
the defendant’s offer.
HHJ Oliver-Jones QC determined that where goods are destroyed, the owner is entitled to restitution in
integrum (putting the claimant in the position he would have been in had the damage not occurred). In
relation to vehicle damage, this equated to paying the market value of the goods. The offer made by the
defendant achieved this entitlement pending that payment. Had the claimant accepted the offer of
restitution she would not have suffered any loss at all.
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He distinguished this position from that where the claimant recovers hire charges because this is where
the tortfeasor is not able to satisfy the entitlement to restitution and therefore the cost of hiring is
consequential on the failure to provide restitution. The cost of providing restitution was considered
irrelevant to the measure of the claimant’s damages. In reaching this finding HHJ Oliver-Jones
disagreed with the findings of HHJ Wyn Rees in Evans v TNT that the failure to accept a replacement
vehicle was refusal of a cash offer, and the recoverable damages were
what would have been incurred if he had acted reasonably
by accepting the offer.
Copley v Lawn and Madden v Heller
Mrs Copley and Captain Madden were involved in non-fault accidents and were referred to Helphire for
the provision of a replacement vehicle. However, both also received an offer of a vehicle from the third
party’s insurers (KGM):
Mrs Copley after she had received the Helphire vehicle and Captain Madden prior to entering into
an agreement with Helphire. On both occasions, the claimants failed to take any action upon
receipt of the offer.
At first instance it was held that the law required the claimants to take reasonable steps to mitigate their
losses and by making no enquiries as to the offers from KGM they had failed to mitigate. In Copley the
claim for hire charges was reduced to seven days (the period by which she should have taken the
vehicle offered by KGM), and Madden was dismissed in its entirety. The court considered that the
claimants’ losses after KGM could have provided a replacement vehicle were nil as the vehicle would
have been provided at no cost to them and the cost to KGM was of no concern. Both claimants
appealed and the matters came to be considered by HHJ Langan QC.
First, did the claimant fail to mitigate? The appellant raised criticism of the offers from KGM as they gave
no detail about the kind of replacement car provided. The court found that the criticism was misplaced.
The question was what the reasonable response to the offer was, and the answer was that the claimant
should have communicated with KGM to clarify the offer. It was held that making a telephone call was
not an unduly burdensome step to take by way of mitigation. Whilst the court acknowledged that Mrs
Copley’s situation differed as she was in a credit hire car already, it was found that the lengthy period of
repairs and the extent of the charges were such that she could not be excused from investigating the
offer by a minor inconvenience.
Second, what was the measure of damages? The appellant argued that the appropriate approach was
that of HHJ Wyn Rees in Evans v TNT, who found that the failure to accept a replacement vehicle was
refusal of a cash offer and the damages recoverable were limited to those which would be recovered if
he had acted reasonably. However, the court preferred the conclusion of HHJ Oliver-Jones QC in
Steadman as a matter of legal principle. It was found that the claimant cannot recover for loss which
could have been avoided and the acceptance of the offer by KGM would have resulted in no
recoverable loss.
The effect on insurers
The findings of these cases have bolstered the position of insurers in arguing that hire charges ought
not to be recoverable where a replacement vehicle has been offered but not considered. However, the
cases are, at present, first tier appeals only. Steadman has not resulted in a further appeal, although a
similar case, Jones v TNT, is being appealed on the same point and is due to be heard at Swansea
County Court in May 2009. It is hoped that this will result in two cases with the same findings both
clearly confirming that the reasoning in Evans is no longer good law. Furthermore, Copley is to be heard
shortly by the Court of Appeal, the result of which will have a profound effect as it will be a binding credit
hire decision.
If the appeals are dismissed then will this resolve the issues once and for all? What is clear is that
should the appeals fail, then insurers will need to ensure that their FNOL (First Notice of Loss)
processes are efficient to allow them to third party capture and to truly benefit from the decisions.
However, a further question is raised as to the effects that the decisions (if upheld) could have on the
General Terms of Agreement (GTA).
Effects on the GTA
Section 3.1 of the GTA makes it clear that:
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Whoever is first to a customer and obtains their agreement should provide the service and all
subscribers should not seek to intervene. All subscribers must, therefore, not seek to transfer a
customer who has agreed to accept a vehicle into an alternative replacement vehicle.
Subscribers would therefore not be in a position to offer a replacement vehicle after the claimant was
already in hire as occurred in Copley. This surely then casts doubt on the sustainability of the GTA in the
event that the appeals are dismissed. Are insurers going to be tempted to withdraw from the scheme
knowing that they can offer replacement vehicles and distinguish any ongoing claim for hire?
Once the appeals are concluded, will that be the end of the matter? Unfortunately it is not always
straightforward.
The grounds of appeal in both Steadman and Copley have been limited to whether the failure to act
upon the offer is a failure to mitigate and the appropriate assessment of damages. The appeal judges
have not considered the implications of the claimant not having read the document making the offer
(Copley) nor was a conclusion reached as to whether the wording constituted an offer.
Furthermore, all three cases involved a claimant who had not made any enquiries as to the offer and so
consideration has not been given to a situation where the claimant does make that telephone call but
then the replacement vehicle offered is not an exact like-for-like or has conditions which the claimant is
dissatisfied with. Therefore, there is the potential for this to lead to a raft of cases where the offer is
inadequate or where the wording of the offer is unclear. Indeed, it could be considered that the judiciary,
witness to system overloaded with legislation involving credit hire, is eager to resolve the current issue.
Following Steadman, HHJ Oliver-Jones indicated that credit hire litigation would be avoided if
defendants and their insurers institute schemes to provide innocent victims of vehicle damage
with suitable alternative means of transport; such schemes would avoid loss, reduce the volume of
litigation and would be very attractive to accident victims.
These cases suggest that the tide may be turning in favour of insurers. Time will tell if 2009 continues in
that vein.
Sarah Cartlidge
Associate, BLM Manchester
Rules of Rome II – choice of law
The saying ‘Rome wasn’t built in a day’ can all too easily be applied to the time it takes for regulations to
filter down from Strasbourg to become applicable law in the UK. And so it was the case with Regulation
No 864/2007 EC (known as ‘Rome II’), which came into force in the UK on 11 January 2009 but was
adopted on 11 July 2007.
Just as the intention of ‘Rome I’ was to create a harmonised set of rules within the EU governing the
choice of law in contractual disputes, the intention of Rome II is the same but with non-contractual
obligations, in other words, claims in tort. However, it does not apply to defamation claims, claims for
unjust enrichment, claims concerning cheques, promissory notes and bills of exchange, revenue and
customs claims, administrative claims together with some facets of trust law and company law.
The general rule under Rome II is that the applicable law is that of the country where the damage occurs
and not where the harmful act was committed. The law of the country of the event giving rise to the
damage
is disregarded. Article 4 states:
... the law applicable to a non-contractual obligation arising out of a tort/delict shall be the law of
the country in which the damage occurs irrespective of the country in which the event giving rise
to the damage occurred and irrespective of the country or countries in which the indirect
consequences of that event occur.
In relation to personal injury cases, the place of damage will usually be the place where the victim
suffered the
injury. This is likely to be so even where the victim or his dependants suffered financial loss elsewhere.
In claims for economic loss which do not flow from personal injury or property damage, the place ‘in
which the damage occurs’ would appear to be the place where the direct economic loss was suffered so
Page 22
that the law of that country would apply. For property damage cases, the place where the property was
situated when it was damaged is likely to be deemed the place ‘in which the damage occurs’.
Exceptions to the general rule include situations where both parties to proceedings have their habitual
residence in the same country. Here the law of that country will apply. In addition where the
circumstances are such that the tort is so closely connected with the law of another country, that
country’s law will apply. This can occur where the tort flows from a contract between the parties. There
are several special parts of Rome II which apply in certain areas. Article 5 deals with instances where a
person suffers damage because of defective products. For example, where a component of a bus
manufactured in the UK is defective and fails causing passengers personal injury in Italy, the applicable
law is the law of the country in which the person sustaining the injury has his or her habitual residence,
in that case, Italy. But this only applies where the product was marketed in that country. Where the
product was not marketed in that country the applicable law is the law of the country in which the
product was applied. However, if the product was not marketed where it was acquired the applicable law
is where the damage occurred. This, however, is subject to the general catch all proviso that where the
tortfeasor could not reasonably foresee the marketing of the particular product in the country where the
damage occurred, the applicable law will be the law of the country where the alleged tortfeasor is
habitually resident.
In some circumstances, parties (for example insurers and commercial enterprises) are free to choose
which country’s law will apply when the damage occurs. That said, such agreement must be have been
negotiated freely and without commercial pressure. This is applicable to agreements entered into before
or after the event giving rise to the damage. There is some concern that parties will attempt a forum
shopping exercise.
Rome II provides that the applicable law governs the basis and extent of liability and the nature and
assessment of damage. This would appear to be a notable change to UK law, which had previously
regarded matters of quantum as procedural, and thereby governed by the law of the court involved
(which could be different to the applicable law). Rome II will be an important factor to all in the litigation
and risk fields where its existence will undoubtedly be a major factor.
Daniel Whittaker
Associate, BLM Manchester
Why health and safety cutbacks could be bad for your health
HSE statistics reveal the extent and the financial cost of inadequately addressing health and safety
which led to:


More than 200 work-related deaths in the UK in 2006.
Some 30,000,000 working days lost in 2006 due to occupational ill health and injury, costing
approximately £30 billion.
Over and above this, do not forget the direct losses to organisations including uninsured losses as well
as the loss of reputation.
Financial climate
The UK is experiencing one of the deepest financial downturns for several decades. At one level there is
a temptation to reduce expenditure on health and safety even though this would involve cutting corners.
Health and safety may not at first glance seem as important as revenue generating activities.
However, this would be both dangerous and unwise.
In reality, competitiveness and good reputation are more important now than ever to ensure the
continued survival and success of businesses, and sensible investment in sound health and safety
practices will help to secure maximum profitability by minimising sickness absenteeism, reducing
costly compensation payouts and avoiding a lot of wasted time investigating accidents and dealing with
the aftermath.
Regulatory climate
It is worth briefly looking at the way in which the regulatory climate has changed since April 2008 with
significant consequences for both individuals and organisations. It should be against this background
that any consideration of changes to health and safety arrangements should be considered. The year
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2008 saw the merger of the HSE with the HSC to create a single regulatory body, a ‘Super Safety
Watchdog’, committed to strengthening the importance of workplace health and safety. The HSE’s
recent consultation paper on the proposed new strategy confirms that it will rigorously seek justice
against those who put others at risk, particularly where there is deliberate flouting of the law.
On 1 April 2008 the long awaited Corporate Manslaughter and Corporate Homicide Act came into force,
making it easier to successfully prosecute an organisation for the offence of corporate manslaughter. As
yet, it has not been demonstrated how this will be applied in practice but, with the potential for extremely
high fines and publicity orders, there has been well-founded concern in board rooms around the country.
The recent House of Lords case of R v Chargot Limited reaffirmed that the HSE does not need to
particularise the allegations against a duty holder. Once exposure to a risk is established the burden of
proof then shifts to the defendant to show that all reasonably practicable steps have been taken to
protect against that risk.
Finally, the Health and Safety (Offences) Act 2008 came into force on 16 January 2009. The Act greatly
increases the level of penalty both in terms of fine and custodial sentences in a wide range of health and
safety breaches.
Enforcement of health and safety law
Health and safety law is, of course, enforced by both inspectors from the HSE and local authorities,
depending on the type of concern involved. In reality, most investigations are conducted by the HSE
which is also not immune from financial constraints. The HSE faces cuts to its budget of 5% per annum
for the next few years.
Moreover, over the last five years the HSE has reduced the number of its inspectors by around 25%. As
a consequence, the HSE is concentrating its investigations and resources on more major incidents and
is targeting specific areas where it considers there are problems, such as refurbishment sites.
Additionally, the level of the average fine in health and safety prosecutions has risen steeply over the
last few years. For example, in 1987 it stood at £792, 10 years ago at £4,694, but in 2006/2007 it had
risen to £15,370.
What will count against you
The leading case in relation to sentencing a corporate defendant in relation to health and safety
offences remains R v Howe & Sons (Engineers) Limited [1999] 2 All ER 249.
The major considerations for the court are:
1 How far below the ‘reasonably practicable’ level the defendant fell.
2 Generally, where death or serious injury results from a criminal act, it is regarded as an
aggravating feature.
3 Failure to heed prior warnings.
4 Deliberately profiting financially from a failure to take the necessary health and safety steps or
specifically running a risk so as to save money.
Of particular relevance to the issues raised in this article is the fact that the size of the company and its
financial strength or weakness cannot affect the degree of care that is recognised in matters of safety.
Steps to be taken
Notwithstanding the financial downturn, organisations that make cutbacks in relation to health and safety
do so at their peril (see page 15).
It is now more important than ever that companies and individuals with health and safety responsibilities
are proactive in managing health and safety and understand how to effectively respond to workplace
accidents.
The indications are that imprisonment will be reserved for the most serious cases and the HSE has
confirmed that the policy will target those who cut corners.
The message to both companies and individuals is clearly not to be tempted, particularly in the current
economic climate.
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For those who put profit before safety, not only will it be more costly in the long run, it may mean a
prison sentence.
Richard Clarke
Partner, BLM Stockton-on-Tees
When is work equipment not work equipment?
Once again the construction, language, interpretation and Parliamentary intention of the regulations
pertaining to the health and safety of workers has been scrutinised by the higher courts in the past 12
months. The cases of Smith v Northamptonshire County Council [2008] EWCA Civ 181, Spencer-Franks
v Kellogg Brown and Root Ltd [2008] UKHL 46 and Grant Couzens v T McGee & Co Ltd (now trading as
McGee Group Ltd) [2009] EWCA Civ 95 have been decided recently in relation to the Provision and Use
of Work Equipment Regulations 1998 (PUWER 1998).
It is worth reminding ourselves of the purpose of the regulations, as legal practitioners who use them as
a tool to either prove or disprove a case and as businesses and organisations who implement them in
the workplace. Lord Justice Rimer’s reminder in Smith was:
The purpose of the regulations is to impose upon employers the practical task of ensuring that
equipment that the employee will be using at work will be safe. The regulations are directed
at prevention of injury and should be interpreted in a practical way.
Lord Rodger in Spencer-Franks said of
the regulations:
Their main purpose is not to give those who have been injured a straightforward route to
damages, but to prevent them being injured in the first place.
The difficulty comes though when strict liability is imposed, as it is in Regulations 4 and 5 of PUWER
1998. All three cases were concerned with this concept. Is it too simplistic in the light of these cases
to say that almost anything is in danger of being interpreted by the court as work equipment? After all,
Lord Rodger of Earlsferry said in Spencer-Franks:
The rival view might be that the door to the control room was not work equipment because it
formed part of the fabric of the structure. But I doubt whether it would be wise to draw too sharp a
division between work equipment and fabric.
Is it also too simplistic to say that the courts can then exclude the item as work equipment by either
delimiting the area of the employers’ responsibility or by an implied qualification in Regulations 3 and 4?
Possibly, but probably not, particularly when it might assist in assessing liability and also as it was the
approach taken by each court in these cases. Lord Hoffman says in Spencer-Franks, ‘You first decide
whether some apparatus is work equipment or not and then you decide whether the regulations apply in
respect of it.’
So, the piece of iron in Couzens used by the driver was undoubtedly capable of being work equipment
under the definition in Regulation 2. But was it excluded as work equipment by another regulation? The
item still needs to be ‘for use’ or ‘used’ at work under Regulation 3(2). Clearly, the claimant was using it
at work in this instance. It also requires that the worker has the implied or explicit permission of the
employer to use the item. How else can an employer be under an obligation, as it is in Regulation 4(2),
to select and risk assess work equipment if it does not know that the item is being used? In Couzens,
the evidence was indeed such that the employer did not know (or ought to have known) that the
claimant was using the iron bar. The claimant’s case failed.
Similarly, in Smith, the ramp used by a council employee to assist in moving a disabled client was work
equipment under the Regulation 2 definition. The council certainly knew of its use and had even
inspected it to some extent.
However, the council had not installed it and it was permanently at the client’s premises being used
largely by parties other than the council’s employee. Once again, however, the regulations defeat
themselves or perhaps help themselves – how can a party be expected to fulfil the absolute obligation to
Page 25
maintain work equipment imposed by Regulation 5 when it lacks the control to fulfil the very obligation
imposed on it.
This was distinguished from the case of PRP Architects v Reid [2006] EWCA Civ 1119, whereby,
incidentally, a geographical and temporal relationship was applied to work equipment perhaps not
envisaged in the drafting of the regulations.
A communal lift was deemed to be work equipment because the claimant’s employer did have the
contractual right under a lease to enforce the maintenance of the lift and therefore had the necessary
degree of control which the council lacked in Smith.
Where does this leave matters? Certainly that, as always, it is better to avoid accidents altogether than
to take your chances with the regulations. At what cost should accidents be avoided and the extent of
injury be minimised? If the higher courts have given any indication recently, then it is perhaps that the
concept of strict liability is being reined in. Whether their approach provides any more certainty for
employers is arguable but hopefully it does show a more interpretive and common sense approach is
being used. If the range of work equipment has been increased by the decision of Spencer-Franks and
the consequent disapproval of the ‘tools of the trade’ definition in Hammond, then the prospects of
applying a qualification to strict liability have been increased by Smith and Couzens.
In the light of Smith, however, the claimant might consider making his claim now against a third party
employer who provided the work equipment (the NHS supplied the ramp in this case) or even against a
non employer who has control over the work equipment in line with Regulation 3(3).
The case of Smith is one to look out for further, particularly for any organisation whose employees carry
out work on third party premises – charities and local authorities immediately spring to mind as being
vulnerable.
The claimant was allowed to appeal and it was heard by the House of Lords on 4 February 2009. Their
decision is imminent, and Disclosure will keep you updated.
Edward Dixon
Solicitor, BLM Leeds
Guidance to ‘credit crunch’ claims
Since the start of the credit crunch in August 2007, an increase in litigation by disappointed investors
against financial institutions has been anticipated. The sharp drop in the financial markets (from a high
of 6754.1 on 13 July 2007, to a low of 3460.7 on 9 March 2009), has prompted investors to turn to their
investment advisors, private banks and fund managers in an attempt to recoup their losses.
JP Morgan Chase Bank v Springwell Navigation Corporation [2008] EWHC 1186 (Comm)
The decision of Mrs Justice Gloster in this case, provides guidance as to how English courts are likely to
approach these emerging claims. It should be noted, however, that Springwell was not a credit crunch
case. The losses suffered by the investor resulted from the Russian crises nearly a decade before the
current credit crunch. The judgment has been welcomed by intermediaries and it suggests that the
traditional approach of the English courts to limiting investors’ ability to recover money by suing their
financial advisors will continue.
The case has affirmed the principle of caveat emptor or ‘buyer beware’ in the capital markets. The court
held that a financial institution did not assume an advisory role in the process of selling complex
financial instruments to a client due to various factors, notably, the sophistication of a client and the
consistency of conventional exclusion clauses and provisions containing the client’s acknowledgement
as to its sophistication and non-reliance in the parties contractual documentation.
The facts
Springwell was an investment vehicle of the Polemis family who owned and operated a large Greek
shipping fleet.
Page 26
In the 1990s, Springwell invested heavily in Russian bonds so they comprised a significant part of its
investment portfolio. JP Morgan had been involved in selling many of these bonds to Springwell. As a
result of the financial crisis of 1997-8, Russia defaulted on its bonds, leading to a large loss on the part
of Springwell. It claimed some US$280 million damages from JP Morgan.
Springwell pleaded as many causes of action as it could, including breach of contract, negligent
misstatement, misrepresentation, and breach of fiduciary duty. The bank strongly denied Springwell’s
allegations on the basis it had not acted as an investment advisor. It argued its bond salesman was just
a salesman and JP Morgan was simply engaged in the marketing of investment products and that there
was no written advisory agreement.
The judgment
Gloster J found in favour of the bank and Springwell also ended up bearing substantial costs. She held
the bank owed no contractual and/or tortious duties of care (nor any fiduciary duties) to advise
Springwell as to appropriate investments or the structure of its portfolio. It was material to this decision
that:



Springwell was a sophisticated investor.
Absence of any written advisory agreement.
Consistency of non-reliance and exclusion clauses in the documentation.
The Polemis’ were sophisticated businessmen. They were well versed in emerging market and financial
products and independently made their own investment decisions.
In addition, contrary to standard practice, the bank and Springwell had not entered into a contractual
agreement or agreed fee structure by which the bank would provide investment advisory services to
Springwell.
The contractual documents entered into by Springwell and the bank actually prevented Springwell from
relying upon the advice or opinions of the bank. The contractual documents included provisions which
contained representations or acknowledgments as to sophistication and non reliance and exclusion
clauses. The judge held that if necessary the bank’s contractual disclaimers would have been effective.
Gloster J also commented that even if Springwell had been successful, its claim would have been
reduced by up to 70% for contributory negligence for an inappropriate reliance on an implied agreement.
This was because it would have allowed Springwell to forego its own responsibilities to expect a full
advisory service but never to have agreed or confirmed the terms of that service.
Conclusion
This case highlights some of the issues that potential claimant investors and defendant intermediaries
will have to consider:





Is the intermediary acting as an advisor or seller?
Advisors are likely to owe a duty of care to investors.
The importance of the key element of reasonableness of reliance on the part of the claimant in
attempting to establish a duty of care to give investment advice.
The importance of the parties ensuring that the contractual documentation reflects the reality of
the perceived commercial relationship.
Whether the terms of the intermediaries’ contract are effective in limiting their liability,
especially under the regulatory rules applicable to the particular intermediary. For example, a
sophisticated individual investor may still enjoy consumer protection under UCTA 1977.
Further, a breach of statutory duty may arise from section 150 of the FSMA 2000. This
provides that a contravention of an FSA rule is actionable by a private person who suffers loss
as a result of that contravention.
Despite widespread prediction of a flood of litigation following the current credit crunch, investors will in
many cases find it difficult to make good their losses through the courts. It is possible, however, that the
court’s approach will change as public and political opinion become more critical of the way banking
transactions are carried out. A claim against an intermediary can damage their reputation and lead to a
breakdown in a valuable commercial relationship.
It may also encourage others to bring similar claims. However good an intermediary’s defence, these
factors will play a role of if and for how long the claim is defended, and whether a confidential settlement
is preferable.
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The trickle of cases has begun and it will be interesting to see whether Barclays enjoys the same
success as the bank in Springwell against the Italian bank, Banca Popolare di Intra.
Tasha Dhami
Solicitor, BLM London
Twists and turns of limitation: an update
One year on from the landmark decision in A v Hoare [2008] UKHL 6, how are courts applying their
discretion over limitation periods in personal injury claims?
In the period since Hoare, there have been a number of cases which have considered the discretionary
extension of limitation periods under section 33 of the Limitation Act 1980. By virtue of this section the
court may permit a claim for damages to proceed, even if brought outside the limitation period, if it would
be equitable to do so. Equity is to be assessed by balancing the prejudice to the claimant if the limitation
period is not disapplied against the prejudice to the defendant if it is. When considering whether to
exercise this power, the court must have regard to all circumstances of the case. This includes six
specific factors:
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The length of, and the reasons for, the delay on the part of the claimant.
The extent to which delay has reduced the cogency of the evidence.
The conduct of the defendant after the cause of action arose.
The duration of any disability of the claimant arising after the date of the accrual of the cause of
action.
The extent to which the claimant acted promptly and reasonably once he knew whether or not
the act or the omission of the defendant gave rise to an action for damages.
The steps taken, if any, by the claimant to obtain medical, legal or other expert advice.
The burden of proving that it would be equitable for a claim to continue is upon the claimant. The overall
question is one of equity and the burden on the claimant is a heavy one.
Cain v Francis; McKay v Hamlani [2008] EWCA Civ 1451
The appellant in the first appeal, Stephen Cain, and the respondent in the second appeal, Shona McKay
had been injured in road traffic accidents, and liability had been admitted. Through the fault of their
solicitors, proceedings had been issued outside the primary limitation period, and limitation defences
had been raised.
In each case, the claimant intimated a claim to the defendant’s insurers very promptly. The insurer
accepted liability, recognising that early settlement would not be possible because of the uncertain
medical prognosis,
One year on from the landmark decision in A v Hoare [2008] UKHL 6, how are courts applying their
discretion over limitation periods in personal injury claims? and made voluntary interim payments. In
McKay, where the delay in commencement was just under one year, the judge exercised his discretion
in favour of the claimant.
The defendant/insurer appealed. In Cain, where the delay was only of one day, the judge refused to
extend time and the claim was dismissed. The claimant appealed.
The Court of Appeal (CA) found that a tortfeasor only deserved to have his obligation to pay damages
removed, if the passage of time had significantly diminished his opportunity to defend himself on liability
or quantum.
The disapplication of the limitation period, which would restore his obligation to pay damages, was only
prejudicial if his right to a fair opportunity to defend himself had been compromised.
The fact that the claimant has a possible claim against his solicitor would not necessarily mean that the
time limit should not be disapplied. The underlying question was whether it was fair and just to expect
the defendant to meet the claim on the merits, notwithstanding the delay in commencement. The length
of the delay, in itself, was not a deciding factor. It was whether the defendant had suffered any evidential
or other forensic prejudice which should make the difference.
However, the reason for the delay might be relevant.
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Although the delay referred to in section 33, was delay after the expiry of the limitation period, it would
also be relevant to consider when the defendant knew that a claim was to be made against him, and the
opportunities he had had to investigate the claim and collect evidence. Applying those principles, the
claimant’s appeal was allowed and the defendant’s appeal was dismissed.
White v Eon [2008] EWCA Civ 1463
In White v Eon, the CA had to determine whether it had been reasonable at first instance for a judge to
decide whether, given the symptoms the appellant had experienced in 1996, he should have been
expected to seek specific advice from a doctor.
The CA held that it had been proper for the judge to make a finding on what was, or was not, reasonable
for the appellant to have done in the circumstances. Given this decision, the CA was unwilling to
interfere with such a finding of fact. The judge was entitled to find as he did, and his decision had been
both obvious and logical.
This decision demonstrates the high threshold an appellant will have to achieve in order to succeed in
such a case.
Leeson v Marsden [2008] EWHC 1011
The court was required to determine preliminary issues arising in connection with a claim issued out of
time by the claimant against the first defendant doctor and the second defendant NHS Trust. The
claimant’s solicitors issued a claim form within the primary limitation period, but it was served one day
after the expiry of the period for service. The claimant was refused permission to proceed with her claim
out of time but her appeal against that refusal was allowed. The refusal, however, was later reinstated
on appeal.
The claimant decided to issue a second claim against the doctor and the Trust. The doctor and Trust
argued that the claimant was acting in abuse of process in asking the court to allow the claim under its
section 33 discretion. Additionally they argued that the claim should be struck out as an abuse of
process as it was indistinguishable from the first claim and the appeal had already used substantial
court resources.
The court held in favour of the claimant on the basis that the court’s discretion under section 33 cannot
be restricted by a freestanding abuse argument based solely on the previous use of court resources.
Appropriate use of the court’s resources could be considered when the court had regard to ‘all the
circumstances of the case’ under section 33.
If the limitation period was not disapplied and the claim was time-barred, the claimant would then have
to sue her former solicitors and, as a result, would be prejudiced because she would not recover the full
value of her claim but rather only the lost chance to bring the claim. When the potential prejudice to the
claimant and to each of the defendants was weighed in balance, the circumstances were firmly in the
claimant’s favour.
It is clear that whilst in certain factual situations the court can give weight to any particular circumstance,
a defendant will still need to produce real evidence of prejudice in order to prevail under a section 33
application.
Legislative reform
There are plans in place to reform the statutory regime relating to limitation in civil actions. The Draft
Legislative Programme released by the government in May 2008, proposed the introduction of a Civil
Law Reform Bill to reform the law relating to limitation periods. A draft bill is expected to be published
later in 2009, and may well cause yet further uncertainty for litigants in an already complex area.
Helen Jones
Partner, BLM Cardiff
White collar fraud: your response ‘toolkit’
History demonstrates that incidences of fraud multiply in a recession. In the current climate,
it is wise to be alert and prepared as businesses and individuals face tough fiscal decisions.
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How can companies and individuals investigate a suspected fraud? What are the options for recovering
any sums stolen? What is the best way to deal with publicity? Below are options to consider when
preparing a response.
Investigation
When a fraud is discovered it is important to ensure that the relevant information will be passed to
investigators.
Discuss this matter with the individual or business accused of perpetrating the fraud. However, seek
legal advice before taking any action to avoid any direct contact with the fraudster prejudicing any
recovery action.
Identify the information which is held about the fraudster, for example, details of bank accounts and
addresses.
The different options can be used to tailor a response specific to the circumstances. The value of the
fraud committed and any combination of the above will be a powerful weapon; the impact on an
individual of finding their fraudulent activities presented in black and white should not be
underestimated.
Criminal recovery
Consider reporting the matter to the police who can activate their powers to search premises and seize
assets belonging to the alleged fraudster.
Reporting the fraud
Do industry regulators require a report when a fraud is discovered?
For example, if the fraud in question involves money laundering you may need to make a Suspicious
Activity Report (SAR) to the Serious Organised Crime Agency.
How is it best to handle publicity?
It may be that media channels are interested in reporting the fraud. Any fraud response plan should
include links to a crisis management team or individuals who might field enquiries from journalists.
Whilst it may be preferable to make no comment while the investigation is ongoing, by showing the
positive counter-fraud action being taken, a business that has been defrauded can show itself in a
positive light.
Consider whether to publicise a fraud internally. This method may advertise the fact that the fraud has
been discovered and therefore act as a deterrent to other potential fraudsters.
Prevention is better than cure
Give consideration as to whether any fraud countermeasures in place are up to date and relevant to
business operations.
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Are all employees educated about fraud prevention?
Is a ‘zero tolerance’ policy rigorously enforced?
Do all employees know who to contact if they discover a fraud?
Are references properly followed up to avoid entering into relationships with staff or suppliers
whose aim is to cause harm to the business?
The current tough economic situation and any resulting financial struggle is likely to directly correlate to
an upturn in corporate fraud. It is not a wise option for individual companies to do nothing. With active
fraud alerts and robust systems in place, dealing with a potential threat from a fraudster can be handled
swiftly and efficiently – leaving individuals and business to get on with their business.
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Caroline Kane, Associate, BLM Birmingham
Costs appeal spotlight
Loss adjuster’s fees: In Cuthbert v Gair [2008] EWHC 90114 (costs), the fees of a loss adjuster were not
recoverable as a disbursement following a discontinuance. As the work was done before a solicitor was
instructed and it was work done that a solicitor would normally do, it could not be considered a ‘litigant in
person’s’ disbursement. The work of a loss adjuster was not ‘expert assistance’ as it was simply the
outsourcing of the insurer’s ordinary function.
In principle, the work done after the solicitor was instructed could have been claimed as a profit cost if
the loss adjuster had been instructed as the solicitor’s agent but as there was no such evidence, the
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loss adjuster’s fees were disallowed, serving as a warning concerning costs incurred by insurers in
successful cases.
Retrospective: Birmingham City Council v Forde [2009] EWHC 12 (QB), provides authority that a
retrospective Conditional Fee Agreement (CFA) is enforceable in principle, although a retrospective
success fee is unreasonable. A few days after a Part 36 offer of £4500 was received from the
defendant, a new CFA was entered into with a retrospective 75% success fee. The next day, the claim
settled for £5000. The defendant brought a number of principle challenges, all of which failed. It is clear
from the judgment that whilst in the view of Mr Justice Clarke a retrospective success fee is not contrary
to public policy in principle (expressly disagreeing with the senior costs judge), the allowance of such an
item is unlikely to be allowed on detailed assessment. Perhaps the most significant point concerns the
allowance of a ‘new-style CFA’ (entered into after November 2005) to take effect for a period before the
CFA Regulations were revoked.
Criminal costs: Turning to recovery of criminal costs from central funds, R v Dodd and Ward, Master
Gordon-Saker, SCCO, 3 March 2009, was an appeal concerning the disallowance of work incurred prior
to a charge under the Health and Safety at Work Act 1974. The police first interviewed the defendants in
2003 but they were not charged until 2007. A defendant’s costs order out of central funds was awarded
following the dismissal of the prosecution. Costs incurred before the charge were disallowed,
proceedings did not exist before the charges were brought. Such an artificially narrow definition of
‘proceedings’ was dismissed. The decision reviews the conflicting criminal costs decisions on this point
and provides much needed clarity on a particularly unpredictable issue that often causes difficulties
when successful defendants try and recover such work out of central funds.
Declarable interests: The Court of Appeal (CA) had to decide whether the recommendation by panel
firms of the legal expenses policy endorsed by the Law Society, ‘Accident Line Protect’ (ALP), was a
declarable interest for the purposes of the CFA Regulations 2000, in Tankard v Fredericks Plastics Ltd,
‘ALP Test Cases’ [2008] EWCA Civ 1375. To decide the issue, the court applied a test of a reasonable
person with knowledge of all the facts and whether this reasonable person would believe that an interest
in recommending the policy would adversely affect the advice being given. The conclusion was that the
ALP scheme was not a declarable interest. However, the court went on to state that if an interest is
present, that the nature of the interest must be declared, it is not sufficient to simply state that there is
one. Although the decision therefore provides a reprieve to ALP panel firms, it helpfully lays down a
more stringent requirement for claims referral or commission schemes and the extent to which those
interests must be declared.
Success fees: It was again the turn of the CA in C v W [2008] EWCA Civ 1459. A common dispute
arises as to the appropriate level of success fees where the defendant had already admitted liability
before a CFA had been entered into. The standard definition of ‘success’ is the recovery of damages
and once liability is admitted, that outcome is assured, subject to the risk of failing to beat a Part 36
offer. Claimants often argue that the risk of alleging contributory negligence and the fact that if a Part 36
offer is not beaten, costs will not be recoverable after the offer, should be factored in.
This is despite the fact that both contributory negligence and the Part 36 risk is irrelevant as far as the
risk of achieving ‘success’ is concerned. The claimant argued that the value of the claim at £680,000
should be taken into account. This approach was rejected. The success fee claimed at 83% was
criticised and a success fee of 20% was allowed. It is hoped that this decision will put a stop to
arguments that high value claims are automatically worthy of unreasonable success fees.
Adam Burrell
Head of costs, BLM Birmingham
Clarity for comparator test in disability discrimination?
Lewisham LBC v Malcolm [2008] UKHL 43
R v IAP Barking & Dagenham LBC [2009] EWCA Civ 108
Clark v TDG Ltd (t/a Novacold Ltd) [1999] ICR 951 (CA)
For almost a decade, when faced with an alleged breach of the Disability Discrimination Act (DDA),
defendant lawyers and claims handlers have found it almost impossible to defend them. The reason for
this situation was the interpretation of the ‘comparator test’ set down in 1999 by the Court of Appeal in
Novacold. In 2008, the House of Lords, in Malcolm, has overruled Novacold and for the moment
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appears to have brought commonsense back to this area of the law. The decision will delight
defendants, who now have the ability to offer realistic comparators in defence of such claims.
Comparators
The ‘comparator story’ starts with a perceived ambiguity in the wording of the original DDA 1995
legislation.
The phrase, ‘treats or would treat others to whom that reason does not or would not apply’, identifies a
potential breach of the Act. ‘That reason’ relates to a) the person’s disability and b) treatment received
because of that disability. ‘Others’ were, of course, the comparators.
How to define ‘others’? There could be a ‘narrow’ or ‘wide’ interpretation; which should it be?
Novacold
In Novacold, Mr Clark had been injured. He was expected to be off work for at least a year (ie disabled
under the DDA) and as a consequence, the employer dismissed him.
The (then) Industrial Tribunal (IT) compared Mr Clarke to someone not disabled but who would not work
for a year.
Since this comparator (the ‘narrow’ interpretation) would also be dismissed, the IT found no disability
discrimination.
The CA heard Novacold in 1999. Mummery LJ concentrated on the meaning of ‘that reason’. He said
the IT interpretation seemed obvious, but the claimant had argued that the phrase should apply more
widely – to the fact that his disability prevented him being able to carry out ‘the main functions of his job’.
Therefore his treatment should be compared to someone who could carry out these functions ie not
disabled and not absent from work (the ‘wide’ interpretation).
Mummery LJ (Novacold) agreed:
This comparison leads to the conclusion that the applicant has been treated less favourably; he
was dismissed for the reason that he could not perform the main functions of his job, whereas a
person capable of performing the main functions of his job would not be dismissed.
Therefore, Mummery LJ explained, the ‘others’ are people who are performing the main functions of
their jobs – ie not disabled and not absent from their work.
In the light of Malcolm, this ‘Emperor’s suit of clothes’ logic appears very flawed. Nonetheless, due to its
seniority as a precedent, it has influenced all claims (especially employment), for almost a decade. (NB
in Malcolm Baroness Hale dissented on Novacold being overruled, arguing strongly for its validity.)
The challenge to Mummery LJ’s logic by Lord Scott in Malcolm, makes satisfying reading for everyone
faced by such claims. This demolition of Novacold begins:
The pointlessness of comparison if the (Novacold)… interpretation ... is adopted ...
It then continues as a full reversal of Mummery LJ’s argument. Lord Scott then cites several cases since
1999 which have simply not followed Novacold. The latest, dated 18 March 2008, with the lead
judgment by none other that Mummery LJ, argues the ‘narrow’ interpretation, in direct contradiction of
Novacold, albeit referring to a premises case, not employment.
(S v Floyd [2008] CA). Here, the ‘wide’ interpretation would have meant a private landlord would not
have been able to evict a disabled person for non-payment of rent; nor sue them for their rent arrears!
Malcolm
Mr Malcolm was schizophrenic. He sub-let his tenancy with Lewisham LBC against the conditions of the
tenancy agreement. Lewisham withdrew the tenancy and began proceedings for his eviction.
This was pleaded as disability discrimination.
The crucial stumbling block was the comparator. According to Novacold, it should be someone not
disabled who had not sublet. The HL (Baroness Hale dissenting) said this cannot be reasonable. The
comparator had to be someone not disabled who had sub-let. Since Lewisham would terminate that
person’s tenancy, the reason was not the disability but the act of sub-letting.
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The HL therefore overruled Novacold and in doing so perhaps returned reality to an area where, under
Novacold, no sensible comparator could ever be found – discrimination would always be present,
effectively creating strict liability for disability claims. The change is welcome and long overdue.
Barking
Malcolm covers DDA Part II (Employment) and Part III (Goods, Services and Property). One final
attempt in February 2009 to limit the scope of Malcolm by excluding Education (Part IV) from its effects
failed, (Barking above).
The argument was that Education, Part IV of the DDA, had not been commenced with the others in
1996 but had only come into being in 2002 by SENDA (Special Educational Needs and Disability Act)
inserting new sections into the DDA, notably s28B. Part IV was, as a consequence, wider than the
original Parts II and III; and should be interpreted along the Novacold lines, not those of Malcolm.
Toulson LJ (a CA judge in Malcolm) entirely disagreed.
He found the wording of s28B(1) the same as that in Novacold (s5)(1)(a)) and Malcolm (s24(1)(a)) and
should be treated the same. Further, the point spoken of in s28B(2), (the broader issue: failure to make
reasonable adjustments) created less reason for concern at applying Malcolm since this alternative
lessened the narrowing effect.
Therefore Malcolm applies to all DDA claims, overruling Novacold in all cases.
Summary
Novacold and the wide interpretation of DDA cparators is finished. Malcolm brings the arrow, sensible,
realistic comparator into eing at last. However, undoubtedly, the aw will continue to test the comparator
oint in disability cases so watch this space or developments in this field.
Roy Woollard
Associate and former head teacher,
BLM Leeds
A note of caution must be sounded. This narrowing of the scope of the DDA was strongly opposed in
Malcolm by the Equalities and Human Rights Commission, HRC (acting as intervener), which suggests
they may revisit the issue in future.
BLM reports
BLM and The Prince’s Trust
BLM’s partnership with the Trust is into its third year. The Trust outh charity helps change young lives.
All our offices participate n and attend various fundraising events.
BLM Pelican briefs
From 25 April to 5 May, a team of six (suitably named the Pelican briefs) are to take part in the Costa
Rica Coast to Coast Insurance Challenge. The team will hike, ride, white-water raft and kayak 200km
across the continental divide at 2,500m and experience the beauty of Costa Rica.
Their fundraising target of £20,000 was exceeded following the BLM national quiz on 5 March. Over 700
people attended six simultaneous quizzes across the country including barristers, accountants, clients
and others.
The aim now is to retain the champion fundraiser crown which the BLM Desert rats won in 2008 when
participating in the Namibia Challenge.
Young Ambassador training
The Trust’s Young Ambassadors have been through a Trust programme and are keen to contribute
further to the Trust’s work. They speak about their experiences at conferences and meetings, run
consultations and focus groups with young people, sit on judging panels for Trust awards and
recruitment panels interviewing potential Trust staff. Crucially they raise awareness of the Trust.
Several BLM offices have been proud to host Young Ambassador training days during which the
Ambassadors receive public speaking training and tell their stories to BLM employees who provide
feedback.
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Terry Renouf explains the importance of the Ambassadors:
They are the best advert for the Trust. It was not the celebrities that persuaded us to help the
Trust but the real life stories of Young Ambassadors. BLM’s support started when one of our
partners in Birmingham was invited along to a Prince’s Trust event in Birmingham – he heard
the stories … and was inspired and enthused.
The Insurance Leadership Group
BLM is a member of The Prince’s Trust Insurance Leadership Group (ILG). The ILG is a unique
networking forum for leaders of insurance companies, brokers and underwriters in the UK. Since
launching in January 2006, the ILG has grown to 43 members who have collectively raised £4.3 million
to support the Trust’s vital work.
Further details about the ILG can be found at princes-trust.org.uk
For more information about BLM’s work with the Trust and other CSR initiatives, please visit blmlaw.com and see our CSR annual report.
Do get in touch to become involved. Each office has a programme of activities and a CSR committee
member who would be happy to hear from you.
Chris Newton
Partner, chair of CSR committee
BLM briefing
The Prince’s Trust Costa Rica Coast to Coast Insurance Challenge
A big thank you from BLM. With your support and generous donations, together we raised over £21,000
at our annual charity quiz evening in aid of The Prince’s Trust, beating last year’s amount by almost
£3,000.
Many thanks to the organisations that sponsored tables, gave raffle gifts or supported the evening.
BLM becomes LLP
Berrymans Lace Mawer converted to a Limited Liability Partnership (LLP) with effect from 1 April 2009.
This conversion will have no effect on the service our clients receive from us and Berrymans Lace
Mawer LLP will remain committed to providing high quality legal services.
BLM Southampton move
Due to further expansion, our colleagues are moving to new premises on 1 June 2009.
The new address will be:
Berrymans Lace Mawer,
Third Floor,
2 Charlotte Place,
Southampton SO14 0TB
Partnership news
Terry Renouf is re-elected
BLM partners have re-elected Terry as the national senior partner for a further term of three years.
Partnership promotions
The firm has promoted six new partners with effect from 1 April 2009. The partnership total is now 121.
The new partners welcomed are Louise Abbott, Matthew Ford, Barbara Hatton, Atiyah Malik, Paul
Owston and Richard Wilkins.
BLM welcomes
BLM also welcomes newcomers Kerris Dale (personal injury, Cardiff), Sarah Elderton (professional
negligence, Manchester), Iain Fraser (professional negligence consultant, Manchester) and Andrew
West (personal injury, Southampton).
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Events
As well as exhibiting at the AIRMIC and ALARM conferences, BLM will also be hosting the following
workshop sessions:
AIRMIC conference
(16 – 17 June, Bournemouth) Protecting the Board – a 360° appraisal of current legal risks
ALARM conference
(22 – 23 June, Bournemouth) Empowerment risk – a review of the Empowerment Act
Dates for BLMs popular major conferences:
Occupational disease - 6 May, London, 29 September, Manchester
Claims review
4 November, London and 10 November, Manchester
Workshops throughout the summer will cover health and safety, transport, and environmental issues.
Please check blm-law.com for confirmation of event dates and updates.
Contribution by Kelly Harper,
media relations executive, BLM London
The information contained herein is correct at the time of printing.
This document does not present a complete or comprehensive statement of the law, nor does it
constitute legal advice. It is intended only to highlight issues that may be of interest to clients of
Berrymans Lace Mawer LLP. Specialist legal advice should always be sought in any particular case.
Disclosure is published by the marketing department of Berrymans Lace Mawer (Castle Chambers, 43
Castle Street, Liverpool L2 9SU) on behalf of Berrymans Lace Mawer LLP and printed by Paterson
Print. ISSN 1475-4711. Issue 13. © Berrymans Lace Mawer LLP 2009.
Solicitors with offices in Birmingham, Cardiff, Leeds, Liverpool, London, Manchester, Southampton,
Stockton-on-Tees. Berrymans Lace Mawer is a trading name of Berrymans Lace Mawer LLP, a limited
liability partnership registered in England under number OC340981, which is regulated by the Solicitors
Regulation Authority and accredited to quality standards ISO 9001 and Lexcel. The registered office is
at King’s House, 42 King Street West, Manchester M3 2NU where a list of members is available for
inspection.
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