PROBLEMATIC PERIODICAL PAYMENTS

There are two recent developments to report:

Follett v Wallace: one string too many!

Firstly, the Court of Appeal’s ruling in Follett v Wallace [2013] EWCA Civ 146 is a case where the Court was required to weigh the commercial interests of compensating insurers against the time honoured principle of providing a catastrophically injured victim with a clean break. Unfortunately, it did so largely in the insurers' favour.

This was a catastrophic road traffic injury claim where neither liability nor quantum was in dispute. The parties were agreed that part of the claimant’s compensatory entitlement should be paid under a periodical payments order.

The dispute concerned the terms of the proposed periodical payments order.  The compensating insurers wanted the order to include a provision that required that the claimant be required to attend regular medical examinations by its medical experts for the rest of his life.  This had nothing to do with the re-evaluation of the claimant’s compensatory needs under a variable periodicial payments order.  Its justification was that it would help the insurers fine tweak their reserves by updating their medical assessment of the victim's life expectancy ; the obligation to surrender to medical examination would endure for the rest of the victims life. 

The New Law Journal is about to publish my critique of this decision in June. I will argue that the commercial interests of motor insurers should not outweigh the personal rights of a victim.  .  I question whether a court has jurisdiction to make such an order, especially where liability and quantum are no longer in dispute, and I wonder why the victims fundamental right to privacy under article 8 of the Human Rights Act 1988 was never raised.

The Damages Act 1996 (as amended by sections 100 and 101 of the Courts Act 2003) does not empower a court to vary an ordinary periodical payments order: the payments must adhere to the scheme devised at the time the order was made.  Accordingly, there should be no need or justification for the victim to be re-examined once the order is made.  Such provision is to be found within the Damages (Variation of Periodical Payments)Order 2005 which permits the payments to be reviewed where, at the time the order is made, it is established that there is a reasonable prospect that at some time in the future of the claimant will either suffer some serious disease or deterioration, or enjoy some significant improvement their physical or mental condition. So the circumstances in which a court retains a jurisdiction to make an order of this kind is restricted to a variable periodical payments order where the contingency originally anticipated materialises; justifying a further medical examination of the claimant.  

The insurers did not have it all their own way, the Court of Appeal restricted the obligation to undergo further (post settlement) examination, as follows:

“The Defence Insurer shall be entitled to require the Claimant to undergo medical examination at its request upon reasonable notice being given to the Claimant at any time during the Claimant's life time, such medical examinations to be limited to obtaining a medical opinion as to the Claimant's general health in order to obtain a quotation for the purchase cost of an annuity to fund the periodical payments and/or (not more frequently than once every seven years) for the express purposes of reviewing its reserve. The cost of any such examination, to include any reasonable costs and any loss of earnings incurred by the Claimant in attending the examination, shall be paid by the defence insurer. The Claimant shall have permission to apply to the court in the event of reasonable concern as to the nature or extent of any such examination.”

Even so, this still represents an incursion in a long established policy of encouraging a clean break between the victim and the tortfeasor’s insurers.    

Practitioners should be wary about accepting this unfortunate precedent as a fait accompli.  It is to be hoped that compensating insurers will be required to justify any and all departures from the clean break principle and prove the imperative for a post settlement medical examination.  For example, a GP report should suffice in most cases simply to confirm that the claimant is alive and that there have been no medical developments that significantly alter the victims statistical life expectancy. Hopefully, someone will remember to raise the article 8 issue next time and to question precisely why the court believes it has the power to impose such a morbid obligation on a victim long after the claim has been settled.

RH v UHB: a new model periodical payments order

The second development to report is that a new model of periodical payments order has been agreed in claims that involve the NHSLA in RH v University Hospitals Bristol [2013] EWHC 299 (QB). 

The model order provides formulae by which the calculation of each year’s indexation of periodical payments can take account of any change between the ‘first release’ ASHH 6115 data published by the ONS in November of the previous year and the ‘revised’ data published during the current year.  The new model order takes into account the fact that ASHE 6115 has been reclassified by splitting it into two separate new Standard Occupational Codes (SOC), ASHE 6145 (“care workers and home carers”) and ASHE 6146 (“senior care workers”).  The judgment and an explanatory note are available to download from the Judiciary website at: http://www.judiciary.gov.uk.

COURT OF APPEAL DISMISSES MOTHER'S DEPENDENCY CLAIM

The common law wife of a man killed at work by the admitted negligence a third party was held in Swift v Secretary of State for Justice [2013] EWCA Civ 193 not to be entitled to claim as a dependent under the Fatal Accident Act 1976, although their posthumously born child was. Whilst the Court of Appeal is undoubtedly correct in its interpretation of the 1976 Act this does not detract from the unfairness of these statutory provisions. 

Section 1 of the 1976 Act restricts the entitlement to present a dependency claim to cohabiting partners who fall within the following categories:

·         the wife or husband or former wife or husband of the deceased (however short the marriage);

·         the same sex civil partner or former civil partner of the deceased (however recently the relationship was registered);

·         any other person (e.g. a ‘common law’ partner) who

(i) was living with the deceased in the same household immediately before the date of the death; and

(ii) had been living with the deceased in the same household for at least two years before that date; and

(iii) was living during the whole of that period as the husband or wife or civil partner of the deceased;

The rationale behind these provisions has been to restrict the entitlement to claim as a dependent to those partners whose relationship possessed a sufficient degree of permanence. However, this has produced an anomalous result in Swift v Secretary of State for Justice whereby the bereft infant was able to claim but its mother was not. 

Ms Swift had only been living with the deceased for 6 months prior to his death.  The 2 year cohabitation rule ignores the fact that Ms Swift and Mr Winters had not only planned to have a child but had actually conceived one by the time he killed.  Surely this is a good enough indication of Mr Winter’s future intention to maintain the mother and child and of a commitment to permanent relationship.

All the Government has achieved by the retention of the anomalous two year qualifying period for cohabiting parties under section 1(3) of the 1976 Act and by dropping the last Government’s proposed reforms to the Fatal Accident Act 1976 is to deliver on a plate a substantial windfall to liability insurers; delivered at the expense of the long suffering public who will be required through their taxes to support Mr Winter’s bereaved common law partner.

This ruling exposes the contradictions in Government’s policymaking. On the one hand our Prime Minister is prepared to risk alienating many of his party faithful by pressing ahead with the Marriage (Same Sex Couples) Bill, yet on the other hand he seems content to perpetuate the relegation of the rights of cohabiting partners to a distinctly second class status.  

Surely one day, some moderately bright spark at the Centre for Policy Studies is likely to wake up to the fact that according to the ONS over 5 million people chose to cohabit outside marriage.  Furthermore, that by capitulating to the insurance industry lobbyists, the conservatives may well have driven an additional nail into their electoral coffin.  5 million voters represent a sizeable proportion of the electorate, by any standard.  The conservatives only won 11 million votes last time! 

Can any political party really afford to ignore or offend this growing class of the voting public? Surely now would be a good time for the Government to reconsider its obdurate and misguided stance towards cohabiting couples, to revisit the Law Commission’s sensible and just recommendations and to wake up its own real politik / self interest in remedying these inconsistencies.

Cohabiting partners are also disadvantaged under the common law, particularly when it comes to separation and property rights. This is the focus of the first programme in Clive Anderson’s new BBC Radio 4 show, Unbelievable Evidence.  It will be interesting to hear his views.  

BOLAM TEST APPLIED TO A HIGHWAY AUTHORITY

The repairs to the rut that caused the accident are visible on the road edge.

Reduced local government finances are likely to increase the prevalence of potholes and ruts that are already an all too common hazard on our roads.  

The ramifications of an accident that occurred in November 2006 on a country lane in the Blackdown Hills in Devon, just a few hundred yards from where I used to live, is likely to have long lasting implications for future claims based on a highway authority’s failure to maintain.

Whilst a highway authority’s statutory duty to maintain road under s41 Highways Act 1980 is often described as an absolute one, it is qualified by the statutory defence set out in s58. The effect of s41 is that if it is established that a defect was dangerous, that it arose out of a failure to maintain and that it caused the loss or injury complained of, then the burden of proof then passes to the highway authority: to establish a defence under s58 to prove that it had taken such care as in all the circumstances was reasonably required. If it fails in this, it will be held liable.

In AC & DC v TR & Devon County Council [2013] EWCA Civ 418 The Court of Appeal reversed a high court finding that because Somerset County Council’s maintenance policy for the stretch of road resulted in less frequent inspections than (i) was applied by its neighbouring authority in Somerset for the same road as well as (ii) than recommended for this category of road under a nationally recognised non-mandatory code of practice, Well Maintained Highways, its s58 defence failed.

Most of us are familiar with the test formulated by the House of Lords in Bolam v Friern Hospital Management Committee [1957] 1 W.L.R. 582 in a clinical negligence claim a professional person is not guilty of negligence if he has acted in accordance with a practice accepted as proper by a responsible body of persons who practice the same art, merely because there is a body of opinion who would take a contrary view. One of the glories of our common law is that a ratio is capable of being applied in a different context where the underlying principle is appropriate.

The national code of practice was not mandatory; it did not set an absolute standard, it was merely relevant evidence of a suitable standard.  A departure from the code was not of itself unreasonable.  The Code post dated DCC’s own policy.  Evidence was adduced from other local authorities to show that DCC’s inspection rates for this category of road was in keeping with other such bodies.

Lord Justice Hughes’s leading judgment is obligatory reading for anyone practicing in this area. He reminds us that the non statutory national code of practice is not mandatory; it does not set an absolute standard, it was merely relevant evidence of what might be a suitable standard.  Accordingly, a departure from such a code is not of itself unreasonable. Devon CC adduced from other local highway authorities with similar inspection rates for the same category of road and Hughes LJ then applied the Bolam ratio to reverse the first instance finding in this respect.  Even so, that is not the end of the story. Other factors, including Devon CC’s own inspection and maintenance records revealed that this stretch of road regularly falls into disrepair in the Autumn and the Court ruled that these special factors required more frequent inspections; so the local authority still failed to establish its s58 defence!

We are likely to see an increase in s41 claims as road maintenance standards inevitably decline.  Although we know from Wilkinson v City of York Council [2011] EWCA Civ 209 budgetary constraints are not in themselves sufficient to establish a s58 defence, they are nevertheless pertinent to factors that must be taken into account under s58(2).

This case provides a salient reminder of how fact specific these cases are; of the dangers of applying an overly formulaic or mechanistic approach to judging what is a reasonable standard of maintenance; of the crucial importance of meticulous case preparation, and the need to preserve evidence both as to the accident scene and independent witness testimony – without which this claim would have failed.

GUIDES TO MIB CLAIMS

The Law Society has just published the 10th edition of its excellent Guide to Motor Insurance Bureau Claims ISBN (978 1 907698 65 1) by Malcolm Johnson and Donald Williams, on sale for £39.95.  A bargain, if practitioners take into account the cost of missing one of the many procedural knock out clauses that are strewn throughout the Uninsured and Untraced Drivers Agreements.  It brings the case law up to date in this anomalous area of our national law provision for victims of motor users. 

The seminal APIL Guide to MIB Claims by Andrew Ritchie QC, published by Jordans (ISBN 987 1 84661 101) is also available.  This retails at £41.00 and last updated in 2008. 

I have no hesitation in recommending either work.

Hopefully, now that Under Secretary of State for Transport, Stephen Hammond MP, is in the driving seat and actively reviewing the MIB Agreements, he will respond to our calls to widen the remit of his patch and mend proposals and to do away with these unsatisfactory and unjust arrangements.

On 22 April this year I filed my detailed proposals for wide ranging reform of our national provision for guaranteeing the compensatory rights of motor vehicle victims.  I am glad to say that I have been joined by many in calling for three key changes:

• That Part IV of the Road Traffic Act 1988 should be revised so that a compulsory third party motor insurance policy should be good for any use, wherever the incident occurs in the UK, and that the cover extended to third party victims should be free from any breaches of policy term or any contractual restrictions or exclusions;

• That our statutory and extra statutory provision should conform to the minimum standards required under European Community law;

• That the extra statutory provision for victims of motor vehicle use should be codified in simple clear and just terms.

There is no need for our national law provision to be as complicated or obscure as it is and the many injustices are inexcusable; fresh thinking is required.  The minister’s consultation report, in July, is keenly awaited.

NEW CFA PRECEDENT for untraced driver claims

That wonderful costs guru, Kerry Underwood, has a precedent CFA that everyone can be confident is water tight and fair to all concerned.  The importance of ensuring that a proper fee retainer is set up in every untraced driver claim cannot be under emphasised.  It is essential that you are properly funded to ensure that your client's claim is properly investigated and quantified. Unfortunately, the case of Moore v Secretary of State for Transport & MIB in 2007 demonstrates what can happen if the investigations are left to the MIB.
Visit Kerry's blog for the precedent CFA. Go to: http://kerryunderwood.wordpress.com/2013/05/02/contingency-fee-agreement-motor-insurers-bureau-untraced-drivers-claims-underwoods-model/
Thank you Kerry!