The cost of compensation proved to be one of the most pertinent issues in liability claims 2019, with the conclusion of the discount rate reviews across the UK being the headline news.
The rate in England and Wales was set at -0.25% rate with Scotland settling on a -0.75% rate. In both cases insurers were left deeply disappointed. The retention of a -0.75% rate in Scotland in particular will favour pursuers greatly compared to the rest of the UK, and has led to concerns of forum shopping. The decision of the States of Jersey to adopt a two-tiered positive discount rate only served to underscore those disappointments.
Against the backdrop of concerns about the increasing cost of compensation, the decision of the Court of Appeal to designate Swift v Carpenter as a test case regarding the methodology of calculating future accommodation claims will be of great interest to insurers.
Considering other heads of future loss, the Court of Appeal held that a future loss of earnings awards should be made on a lump sum Blamire-type basis where the evidence presented was wholly inadequate. The most recent ASHE 6115 data also confirmed that the wages of care workers continue to rise, with concerns also arising about the impact of the introduction of Universal Credit when considering offers of settlement.
In Scotland, there is the expected introduction of Damages Based Agreements and QOCS in the coming months. On the issue of the application of QOCS in England and Wales, a High Court decision finding that QOCS does not automatically apply to a 'mixed claim' concerning misuse of data, which also included a personal injury element. The decision was welcomed as providing clear and consistent guidance on the issue of mixed claims.
During the season for Christmas parties, the decision of Bellman last year extended the principles of vicarious liability to the festivities, finding a sufficient close connection between an assault committed by a managing director on an employee following their Christmas party, and the business.
In sharp contrast to the finding of Bellman, to the relief of insurers and employers, the Court of Appeal upheld the first instance decision in Shelbourne. Cancer Research UK was not vicariously liable for a serious back injury suffered by an employee at a Christmas party when she was lifted up and dropped by a colleague. The Court of Appeal was unwilling to impose vicarious liability where there are "wider social consequences", including events which do not necessarily provide a benefit to the employer itself.
Looking to the future of vicarious liability, the Supreme Court heard appeals in November on both the Barclays Bank and WM Morrisons decisions. Judgments are expected in the New Year, and they will provide key direction on how the Courts address the two part of the vicarious liability test. The Morrisons ruling will have particular importance given the public policy issues in assigning vicarious liability to an employer who was the target of the malicious action by the tortfeasor.
Scotland continues to extend the scope of vicarious liability along the same lines as England and Wales, but the Scottish courts have issued several important judgments this year on the concept of reasonable foreseeability when considering causation.
The decision in King v Common Thread was welcomed as it confirmed that for a claim to succeed, both the cause of and the injury itself, must be reasonably foreseeable. This was further supported in the decision of Miller v North Lanarkshire Council. It was not held that it was not reasonably foreseeable that a tripping injury at a school would lead to psychiatric injuries developing 18 months later when the pursuer was asked not to teach at the same school whilst the claim was ongoing.
However the decision in Sullivan v Dunnes Stores was not as beneficial to defenders, demonstrating that if reasonable foreseeability is established an award of contributory negligence may be harder to obtain.
The liability of hotels and tour operators for the actions (or inaction) of their representatives also became a hot topic in 2019.
The case of X v Kuoni reached the Supreme Court, who unanimously concluded that guidance from the Court of Justice of the European Union is required. The claimant, X, was sexually assaulted by a hotel employee whilst on a package holiday in Sri Lanka booked with Kuoni. The employee, a maintenance contractor, had offered to show X to the reception using a shortcut when the attack occurred. The referral will address whether or not Kuoni is liable for damages in breach of contract and/or under the Package Travel Regulations.
In the decision of Al-Najar, the High Court confirmed that hotels do owe guests a duty to take reasonable care to protect them against injury caused by the criminal acts of third parties. On this occasion, however, whilst the claimants had been catastrophically injured in a hammer attack perpetrated by a non-guest, the hotel had not breached its duty by failing to prevent the attacker from entering.
The Courts also provided guidance in respect of public liability claims involving the Highways Act, finding that the burden of proof is on claimants to establish a breach. Photographic evidence alone is unlikely to be sufficient in highway defect claims. However, a defective highway does not have to have been designated as a 'highway' to be considered as such, it is sufficient for a path to become a highway as a result of consistent usage.
The Supreme Court provided clarity on the disclosure obligations of those who had been found guilty of lesser offences and/or received cautions when applying for roles involving vulnerable parties and children. For those considering applications by third parties for documents, the Supreme Court also ruled on the constitutional principle of open justice. The court should be free, as part of its inherent jurisdiction, to grant public access to documents other than the statements of case, where an application is made by a non-party.
On the issue of costs, there have been several important decisions. The Court of Appeal issued an important judgment on calculating success fees, which will impact the business model adopted by many claimant solicitors in the aftermath of the LASPO reforms. The High Court found that an offer for nil damages (where the claimant sought an apology and costs) can be considered a genuine Part 36 offer and subject to the usual costs consequences.
The courts also gave guidance on the recoverability of disbursements included within the existing fixed recoverable costs regime, and whether the fixed costs regime should apply where a consent order suggested costs were to be assessed on the standard basis.
Looking to the next set of legislative reforms, the Government consultation on the extension of the fixed recoverable costs regime closed in June 2019, and we expect a response next year. The proposals would extend FRCs to all civil cases in the fast track, whilst expanding the fast track to include simple ‘intermediate’ cases valued between £25,000 and £100,000 in damages.
During the Parliamentary progression of the Civil Liability Act, there were several discussions regarding an increase of the small claims track limit for liability claims from £1,000 to £2,000. Since the passage of the Act, discussions have largely focussed on the whiplash small claims reforms, and it is unclear whether this change will be implemented when the small claims track limit are amended in anticipation of the whiplash reforms. We await any update with great interest.
We are also interested to see whether the Courts and Tribunals (Online Procedure) Bill is resurrected with the new Government is in situ. Whilst the Bill received criticism, and did not pass prior to the dissolution of Parliament, it would have provided a step forward in the modernisation of the legal system.