January 16, 2019

Liability - 2018 in review

The Civil Liability Bill attracted a lot of attention last year in advancing the reforms for whiplash claims following road traffic accidents. The Bill, however, will also have an impact on liability claims. The introduction of a new methodology for calculating the discount rate will have wide ranging effects in England and Wales.

In Scotland and Jersey, the reviews of their discount rates remains ongoing. Concerns remain in Scotland regarding the possible overcompensation of claimants, and the proposed introduction of a split tiered discount rate in Jersey may have unintended effects such as forum shopping. 

Bringing Scotland into line with the Court system in England and Wales, the passing of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act introduces qualified one-way costs shifting (QOCS). The Act also allows the funding of claims by way of Damages Based Agreement. It was argued that including future losses as part of a solicitor’s DBA fee could mean a significant loss of damages for Claimants, yet the final version of the Act allows for fees to be calculated on full losses awarded. This will be relevant to claims subject to the discount rate in Scotland, in which there may be substantial future losses awarded.

For those claims of lower value in England and Wales, the proposed small claims track changes, expected to be implemented by April 2020, will include the raising of the limit for EL/PL small claims to £2,000. The proposal did receive criticism from the Justice Committee with MPs commenting that the increase could result in the removal of safeguards with employees no longer likely to bring what can be complex claims. The costs awarded (or lack thereof) for small claims may mean that legal representatives will be unwilling to handle these claims. Nonetheless, these proposals are likely to be advanced late next year.

Advances have also been seen in the case law surrounding vicarious liability. The independent contractor defence has been a longstanding defence of claims of vicarious liability for many years, a shield used by liability insurers and their policyholders.

The Court of Appeal held in Barclays that the defence is no longer recognised for vicarious liability claims. The judiciary have reiterated their appetite to extend the application of vicarious liability both in a sexual abuse context and beyond, reaffirming the principles set out in Cox and Mohamud.  This decision is likely to result in increased interest from claimants who were previously prevented from pursuing a cause of action by such a defence.

In Scotland, the Glasgow Sheriff Court issued a decision in the matter of Grubb v Shannon extending the scope of vicarious liability along the same lines as England and Wales. Specifically referring to Cox, Sheriff Reid noted sufficient control had been exercised in the circumstances to render the relationship between the parties akin to that of employment, thus generating the vicarious liability.

Bearing these recent decisions in mind, the scope of abuse claims may shift and there will likely be an increased exposure for insurers should claims be pursued against "non-traditional" historic abuse defendants, including commercial institutions, voluntary organisations, sports clubs and non-conventional religious organisations.

Notwithstanding the disappearance of the independent contractor defence in VL cases, the general principle of vicarious liability for the actions of a company’s employee has been extended.

The Court of Appeal in Bellman found that there was a sufficiently close connection between an assault committed by a managing director on an employee following their Christmas party and the business. The connection was established despite the unusual location and time at which the assault was occasioned on the Claimant. This extension of the vicarious liability principle presents insurers and policyholders with further liability risks, and may result in additional vicarious liability claims ordinarily dismissed.

The case of Piepenbrock v LSE also provided interesting commentary on the interplay between vicarious liability and occupational stress, along with issues of professional reputation. The issue of reputational interests was also addressed in the case of James-Bowen. The Supreme Court ruled that a proposed duty on employers to protect the economic and reputational interests of employees whose misconduct formed the subject of a civil claim against that employer "would not be fair, just or reasonable.”

Many practitioners of claims involving holiday gastric illness will have found themselves with occupational stress this year, following the introduction of Fixed Recoverable Costs to clamp down on the dramatic increase of unmeritorious claims in the holiday sickness arena. It is clear that these claims will no longer be the revenue stream that many firms could rely on, and many may now look to new revenue streams.

Whilst these costs changes were fast tracked due to the importance assigned to them, the proposed changes for claims above the fast track limit following the Jackson Supplementary Costs Review have stalled. We are expecting that movement on Fixed Recoverable Costs for the proposed intermediate track (£25,000 - £100,000) will be seen in the next year.

As the proposed changes in the rules in respect of costs have been blunted for now, those at the sharp end of the law have also been subject to legal commentary. In the matter of Robinson, the Supreme Court allowed the appeal of a Claimant who was injured by police officers during the arrest of a drug dealer. The decision reaffirmed that the operational conduct of the police has never been protected by a wholesale “immunity”. The decision does not change this, and reiterates that the police are subject to a duty of care where they have carried out a positive act directly resulting in harm to a third party.

The recent case of Dixon also provided interesting commentary. The case confirmed that whilst the initial actions of another officer may be unlawful, officers may still have lawful independent justification for further intervention. An initial unlawful act by another officer does not automatically render further actions unlawful too.