PI Brief Update

Cameron’s Announcement on Health & Safety Measures and Capping Costs in Claims - Susan Brown, Prolegal

09/01/12. David Cameron has announced plans to tackle the so-claimed "compensation culture" and to free business from "the stranglehold of red tape". He laid out a number of planned measures including;

· to extend the current scheme that caps the amount that lawyers can earn from small value personal injury claims, and reduce overall costs in cases funded by 'no win no fee' deals. This will help bring down the cost of many cases and deter the speculative health and safety claims made against good businesses that would appear not to have done anything wrong

· the health and safety law on strict liability for civil claims will be changed so that businesses are no longer automatically at fault if something goes wrong.

· we will investigate the demands made by insurance companies on businesses to ensure that levels of compliance do not force businesses to go far beyond what is actually required by the the law to secure their insurance cover.

Susan Brown, Director and Head of Personal Injury and Professional Negligence at law firm Prolegal takes a closer look at the measures.

The measures in relation to strict liability and demands made by insurance companies are taken from Professor Lofstedt's recommendations. On the latter, it seems unlikely anyone would argue against the recommendation that insurance companies do not, largely through the ignorance, poor understanding or lack of training of staff, impose unnecessary obligations on businesses. However the effect of this is unlikely to be game-changing. As regards removing strict liability, that makes sense to the limited extent that it was recommended by Professor Lofstedt, that regulatory provisions imposing strict liability be qualified with "reasonably practicable" where strict liability is not absolutely necessary, or amended to prevent civil liability from attaching to a breach. However it must be remembered in considering amendment that regulations generally impose strict liability on employers for a good reason. For example in making employers responsible for injury resulting from defective equipment without requiring employees to prove that their employers were aware of the defect or were in any identifiable way to blame for its presence, the focus of the law is to relieve the employee of the burden of proving something that in many cases it would not be in his power to prove. Arguably, the fact that this in a few exceptional cases results in what can be described as unfairness to employers (the example usually quoted is Stark v the Post Office where the defect in the postman's bicycle that caused the brake to snap was one that could not have been discovered even on close inspection) is massively counterbalanced by the thousands of cases where employees injured by faulty work equipment when simply doing the job they are told to do by their employer are able to recover compensation without having to demonstrate exactly what caused the fault. There is always a great deal to be said for simplicity in the law, and strict liability achieves this.

As regards the proposed extension of the capped costs scheme, that proposal appears to go back to the suggestion that the MoJ portal process that has applied to low value motor claims since April 2010 be extended to other types of claim, that was picked up by Lord Young in his "Common Sense, Common Safety" report. It was and remains naïve to suppose that any extension of the MoJ portal process would act as a costs cap that would provide certainty to businesses or influence any decision they might make to settle "speculative claims" out of court. Compare the ease of establishing liability in a motor claim – most of those that are settled within the MoJ process are rear-end shunts where the driver responsible freely admits to his insurers that he made an error – with the wide range of difficulties in obtaining evidence and considering complex liability issues in, for example, pavement tripping or industrial disease claims. The costs cap in the MoJ process applies only to those straightforward claims where liability is not in dispute. Costs in cases where liability is disputed that are fought through the courts are not subject to the cap. It is unlikely that more than a small proportion of non-motor cases could be resolved under such a process. In any case such a cap is just as likely to operate as an incentive rather than a deterrent to settling "speculative claims", since the difference in cost between settling them early and fighting and losing them would be even higher than it is now. It is also interesting to note that government seems to be a little confused over the interplay between its different legislative changes in relation to civil costs. Qualified one way costs shifting, one of the proposals linked to Part 2 of the Legal Aid, Sentencing and Punishment of Offenders Bill, will operate to encourage rather than deter speculative claims by enabling claimants to pursue them without the risk of having to pay the other party's costs if the claim is unsuccessful.

Health and safety is important and it seems unfortunate that this government wishes to encourage businesses to regard it as a negative thing that is more about red tape and spurious personal injury claims than about the prevention of unnecessary injuries.

Susan Brown is a Director at law firm Prolegal

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