22 May 2015 Edition 96
BC DISEASE NEWS A WEEKLY DISEASE UPDATE
CONTENTS
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Welcome Welcome
PAGE 3 Welcome to this week’s edition of BC Disease News. In the last week it has been indicated that reform of noise-induced hearing loss claims is on the new Reform may be on the way government’s agenda, and Slater and Gordon has said that Quindell will remain a separate entity under its ownership. for deafness claims
This week we present a feature examining this week’s decision of the Quindell to remain separate Supreme Court in Zurich Insurance PLC UK Branch v International Energy entity under Slater and Group Limited [2015] UKSC 33. We consider the judgment, reaction to it, and Gordon the implications of it.
MRO seeks judicial review of Any comments or feedback can be sent to Boris Cetnik or Charlotte Owen. MedCo As always, warmest regards to all.
SRA warns firms on
marketing following SUBJECTS introduction of inducements ban Possible Reform of Deafness Claims – Quindell to Remain Separate Entity Under Slater and Gordon – SRA Warning on Inducements Ban – Master of PAGE 4 Rolls Calls for Simplification of CPR – Insurers’ Liability in Mesothelioma Claims – Zurich Insurance PLC UK Branch v International Energy Group Master of the Rolls calls for Limited simplification of Civil Procedure Rules
Feature: Insurers Only Liable for Proportionate Share of Exposure in Mesothelioma Claims, Supreme Court Rules – Zurich Insurance PLC UK Branch v International Energy Group Limited [2015] UKSC 33
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division (PSD) will be a separate entity was made by the MoJ, it could not be Reform may be on the from the Australian firm, dealing with reasonably argued that MedCo was way for deafness claims volume cases. abusing a dominant position.
Approval for the sale to Slater and Gordon We will update on the progress of this It has been indicated that reform of noise- is now awaited from the Financial Conduct challenge, alongside the ongoing induced hearing loss (NIHL) claims may be Authority. challenge to MedCo on the grounds of on the new government’s agenda for inadequate consultation, as we have reform, following comments made by the Kinsella said that the Slater and Gordon reported previously. head of the government’s Claims 1 approach will not change. ‘We’ve not Management Regulator (CMR). changed our strategy at all’, he said. ‘One side of the business would deal with the SRA warns firms on Kevin Rousell told the Modern Claims complex cases and the other with volume marketing following Conference in London that the area has and low-level cases in an efficient seen a big increase in activity in recent way…Overall [it offers] scale and the introduction of years in consequence of the regulations opportunity to learn across the two, applied to it. [providing] technology and a holistic inducements ban
service and a joined-up service in terms of ‘NIHL is subject to the disease claim costs claimants for low-level or high-volume The Solicitors Regulation Authority (SRA) regime which is different to personal cases, and in particular in that complex has warned personal injury firms about injury’, he said. ‘There seems to be an area having resources to take on cases’. misleading marketing, following the awful lot of waste in the system. We had introduction of the ban on the use of lots of it in respect of financial claims such 5 inducements. as PPI and we’re seeing it happen again MRO seeks judicial
with NIHL’. In a guidance note the regulator said that review of MedCo firms must ensure publicity is accurate, The prospect of future reform to the NIHL ‘including not offering or suggesting or market was echoed by Professor Dominic One of the country’s largest medical implying that you are offering any Regan, an attendee at the conference and reporting organisations (MROs) is seeking inducements in breach of the ban. Doing leading expert on civil litigation. He to challenge the government on account of so is likely to undermine the trust the tweeted on 19 May: ‘Top of agenda for considering itself prejudiced by the new 4 public places in you’. MOJ is reform of deafness claims’.2 MedCo portal.
The SRA has decided not to introduce any Elsewhere, Mr Rousell confirmed that Though an application for judicial review specific rules to implement the ban on reversing the recent court fee rises – which by Speed Medical against the Ministry of inducements, which came into force on 13 were increased by over 600% in some Justice (MoJ) was rejected last week by April under section 58(2) of the Criminal cases – is unlikely to be a priority for new the High Court on the papers, the Justice and Courts Act 2015. The Act justice secretary Michael Gove. He said: company yesterday issued a notice to defines an offer of a benefit as an ‘The next five years are going to be just as renew its application at an oral hearing. inducement if it is ‘intended to encourage testing – I doubt we will be going back and or is likely to have the effect of reducing court fees – we will have to live Since 6 April, a claimant seeking to bring a encouraging’ a personal injury claim. with them’. low-value whiplash claim following a road
traffic accident is required to instruct a ‘Benefits’ include money, other property or medical expert from a shortlist generated an opportunity to obtain a benefit, such as Quindell to remain randomly by the MedCo portal. This list is through a prize draw. The ban is cast made up of either one high-volume separate entity under widely, extending under section 58(3) to national MRO (a tier 1 provider) and six benefits received by third parties. other (tier 2) providers, or seven individual Slater and Gordon medical experts. The SRA said in its guidance note: ‘The
Quindell’s legal services arm will remain a primary focus of any action we take is Speed is one of the tier 1 providers. In a distinct company from its new parent consumer protection and support for the claim lodged in late March it contended Slater and Gordon once the £637 million rule of law…A breach of the ban on that only including one tier 1 provider in takeover is complete, Slater and Gordon inducements would be likely to undermine the list was anti-competitive. has said.3 public confidence in the delivery of legal However, Mr Justice Leggatt last week services. It is also likely that offering Neil Kinsella, chairman of Slater and rejected the application, saying that as inducements will evidence a failure to Gordon UK, told the Modern Claims MedCo was not an MRO itself and the uphold the rule of law and the proper Conference that the professional services decision on the content of search results administration of justice...As well as
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complying with the law, you should simplifying the rules. With proper Feature: Insurers Only ensure that you behave in a manner that resources, said Dyson, ‘there is no is in your clients best interest, does not reason why the joint committee of our Liable for Proportionate call into question or undermine your Civil Justice Council and Civil Procedure integrity and that you comply with your Rules committee could not embark on a Share of Exposure in regulatory obligations’. similar exercise here’. Mesothelioma Claims, The SRA’s guidance note also advised England and Wales could also learn from firms on the use of inducements on those Brazil, the Master of the Rolls said, where Supreme Court Rules areas outside personal injury where they a new civil procedure code has been – Zurich Insurance are still allowed: ‘You will need to approved and will come into force in consider the needs and circumstances of December. Article 191 of the new PLC UK Branch v each individual client, for example Brazilian code ‘allows the parties to whether they are particularly vulnerable modify the procedure as it applies to their International Energy or whether they may have difficulties claim’. understanding the information you give Group Limited [2015] them…It is important that you are able to Dyson said it was ‘worth thinking about UKSC 33 show that clients have made an informed whether to adopt such a procedure here’ decision, having considered the options to enable claims to be dealt with more available and that you have treated them expeditiously. He said: ‘Provided Introduction fairly. A decision to instruct should not be agreement between the parties is subject based on your offer of an inducement in to court consent, I can see no objection to The Supreme Court has ruled this week exchange for clients’ instructions…If you allow parties some freedom to manage in a landmark judgment that an offer an inducement to clients or potential the litigation’. employer’s liability insurer which covered clients, you must ensure that your an employer for only part of the period interests do not conflict with those of your Praying in aid of Magna Carta, Lord during which the employer tortiously client. You can never act where there is a Dyson, who is chairman of the Magna exposed a victim to asbestos is liable in a conflict, or a significant risk of conflict, Carta Trust, said chapter 40 of Magna mesothelioma claim only for a pro rata between you and your client’. Carta, which provides ‘To no one will we part of the employer’s liability to the sell, to no one deny or delay right or victim, equivalent to the period of justice’, was as important as it was in exposure to asbestos covered by the Master of the Rolls 1215, though the main focus of attention insurer as a percentage of the total calls for simplification tended to be on the prohibition of the sale exposure. of justice than the prohibition on delay. of Civil Procedure However, an insurer is liable for 100% of However, Dyson warned that the rush to the defence costs, notwithstanding that it Rules justice could be ‘just as dangerous as a did not cover the defendant for the full period of exposure to asbestos. leisurely amble. Tortoises and hares
The Master of the Rolls has called for come to mind’. Expanding further, he In this article we consider the judgment of further simplification of the Civil said: ‘If litigation is conducted at the Supreme Court in Zurich Insurance Procedure Rules to reduce delays across breakneck speed, there’s a risk that 6 PLC UK Branch v International Energy the justice system. parties will be unable to present their Group Limited [2015] UKSC 33 (‘Zurich v cases effectively and judges will not have IEG’), reaction to it, and its implications in As a result of dealing with a ‘high sufficient time to produce decisions [that practice. proportion’ of self-represented litigants, are] sufficiently researched and carefully
Lord Dyson said the profession should be considered’. Legal Background ‘prepared to change our way of
conducting our litigation in other ways to Speaking more generally, Lord Dyson In the seminal decision of Fairchild v make it more effective, and reduce costs said that all the recent changes had Glenhaven Funeral Service Ltd [2002] and delays’. made life more difficult due to the rise in UKHL 22, [2003] 1 AC 32, the House of litigants in person and that the courts Lords decided that a victim can hold liable Lord Dyson was speaking at an event were doing ‘all we can to adapt our all employers who negligently exposed entitled ‘Delay too often defeats justice’ processes and train our judges and him or her to asbestos if the exposure and highlighted other jurisdictions where lawyers on how to deal with cases where materially increased the risk of harm to civil procedure reforms were taking place. they are faced with a litigant in person’. the victim. But the House of Lords later Although the courts were, he said, decided, in Barker v Corus UK PLC In Scotland, for example, the Civil Justice making progress, there was ‘a lot more [2006] UKHL 20, [2006] 2 AC 572, that Council has embarked on a project for work to be done’, he warned. PAGE | 4
each such employer was only liable pro to asbestos dust by his employer, right of contribution in respect of defence rata for the period which exposure by it Guernsey Gas Light Co Ltd (‘GGLCL’). He costs ([94]-[95]). bore to the total of all periods of exposure. later contracted mesothelioma, from which Parliament reversed the decision in Barker he died ([10]). Before his death, he sued The decision on the first issue disposed of in the UK by the Compensation Act 2006, the Respondent, International Energy the appeal. However, because of the making each employer liable in full, with Group (‘IEG’), as successor in title of general importance of the other issues, the rights of contribution among themselves. In GGLCL, and recovered compensation of Supreme Court stated its opinion on them. BAI (Run Off) Limited v Durham [2012] £250,000 damages and interest plus By a majority of 4-3 the Court concluded UKSC 14, [2012] 1 WLR 867 (the ‘Trigger’ £15,300 towards his costs. IEG also that, had the position in Guernsey been litigation), the Supreme Court held that an incurred defence costs of £13,151.60 the same as in the UK under the 2006 Act, employer’s liability insurer must indemnify ([11]). During the 27 years of exposure Zurich would have been liable in the first the employer against exposure-based GGLCL had two identifiable liability instance to meet IEG’s claim in respect of liability incurred under the principle in insurances, one with Excess Insurance Co the compensation paid by IEG in full, but Fairchild. Ltd, for two years from 1978 to 1980, the would have been entitled, in respect of the other with Midland Assurance Ltd, for six 21 years not covered by the Midland Issues years from 1982 to 1988 ([12]). The insurance, to claim a pro rata contribution Appellant, Zurich (‘Zurich’), as successor from Excess and IEG. Zurich v IEG was an appeal from to Midland’s liabilities, maintained that it Guernsey, where there is no equivalent of was only liable to meet 22.08% of IEG’s Lord Mance (with whom Lords Clarke, the 2006 Act. The common laws of loss and defence costs, based on the fact Carnwath and Hodge agreed) gave the England and Guernsey were agreed to be that Midland only insured GGLCL for leading majority judgment on these issues. identical in this area. The principal issues 6/27ths of the 27-year period of exposure Lord Mance said the case illustrated some were: ([14]). of the problems arising from the special rule applied in Fairchild and Trigger, (1) whether the reasoning in Barker At first instance, the trial judge ordered namely that a victim could hold liable all still applied in Guernsey Zurich to meet 22.08% of the employers who negligently exposed him to (paragraph [8] of the judgment), compensation but 100% of defence costs. asbestos. The rule allowed a person and meant that an employer’s The Court of Appeal reversed that responsible for exposure to select any year liability insurer covering an decision, ordering Zurich to pay 100% of during which he could show that he carried employer for only part of the both the compensation and defence costs liability insurance and to pass the whole period during which the employer ([15]). Zurich appealed in relation to both liability to the liability insurer on risk in that exposed a victim is liable for only compensation and defence costs. year, without regard to other periods of a pro rata part of the employer’s exposure. The anomalies of such an liability to the victim ([9]); Judgment approach were self-evident. Firstly, it was (2) if Barker did not apply and the contrary to principle for insurance to position in Guernsey was now the The Supreme Court unanimously held that operate on a basis which allows an same as in the UK under the the common law rule of proportionate insured to select the period and policy to 2006 Act, whether such an recovery established in Barker continues which a loss attached. Further, a liability insurer is liable in the first to apply in Guernsey; it accordingly insurance would cover losses arising from instance for the whole of the allowed Zurich’s appeal in respect of risks extending over a much longer period employer’s liability to the victim; compensation, restoring the order that it than that covered by the policy, in respect and should pay 22.08% of the compensation of which no premium had been assessed (3) if so, whether the insurer has pro ([27]-[31], [35] and [100]). or received by the insurer. In addition, an rata rights to contribution from insured was able to ignore long periods in However, it dismissed the appeal in any other insurer of that employer respect of which he had not taken out relation to defence costs. There was and/or from the employer in insurance. Finally, an insured had no nothing to suggest that IEG’s costs would respect of any periods not incentive to take out or maintain have been less if the claim had been covered by the insurer ([9]). continuous insurance cover. confined to the six-year period covered by There were parallel issues regarding such Zurich’s (Midland’s) policies. More While an insurer, on the face of it, was an insurer’s responsibility for defence significantly, the costs were incurred by liable for all of the victim’s loss, the costs incurred in meeting the victim’s IEG with Zurich’s consent, and were analysis could not stop there. Those claim. covered by the policy wording. There was anomalies required a broad equitable no reason to construe the policy wording approach to be taken to contribution. A Factual Background as requiring some diminution in IEG’s sensible overall result was only achieved if recovery, merely because the defence an insurer held liable in such a situation For 27 years from 1961 to 1988, Mr Carré costs also benefitted IEG for an uninsured was able to have recourse for an was negligently and consistently exposed period of time ([36]-[38]). There was no appropriate proportion of its liability to any PAGE | 5
co-insurers and to the insured as a self- decision. ‘We are a bit disappointed but we recognise that that was probably the weaker limb insurer in respect of periods of exposure of the arguments that we presented’, he said. ‘The primary decision, that a solvent employer for which the insurer had not covered the should pay a contribution for their uninsured years of the compensation claim itself, is the insured. The fact that the parties might not main prize as far as we are concerned’.8 have contemplated or made specific provisions about co-insurance and self- Comment and Conclusion insurance was no obstacle to the court doing so. An employer therefore had a This decision is the latest in a long line of decisions on mesothelioma emanating from the right to contribution against any other House of Lords and Supreme Court. The ratio of the decision – that Barker still applies in person who was, negligently or in breach Guernsey in the absence of the 2006 Act – is of limited interest and importance for most of duty, responsible for exposing the victim disease practitioners. It is a narrow decision, applying only to the facts in Guernsey. But the to asbestos. After meeting the insurance decision does at least confirm that it is the view of the Supreme Court that Barker remains claim, the insurer would be subrogated to good law beyond the reach of the Compensation Act 2006, fortifying, for example, the recent that right to contribution against the other decision of the High Court in Heneghan v Manchester Dry Docks Ltd [2014] EWHC 4190, responsible source of exposure. Zurich which prayed in aid of the Barker principle to hold that lung cancer claims ought to be was also entitled to look to IEG to make a apportioned between defendants according to the extent to which each defendant proportionate contribution as a self-insurer contributes to the risk of the development of lung cancer. ([42]-[43], [52]-[53], [63], [75]-[78], [96]). However, the remainder of the decision – about the position in the event that Guernsey had Lord Sumption (with whom Lords the equivalent of the 2006 Act – which is important for disease practitioners in England and Neuberger and Reed agreed) gave the Wales, is all entirely strictly obiter dicta. It is not a binding decision and may, theoretically at leading minority judgment. He was of the least, not be followed by future courts, though it will be strong persuasive authority. view that Zurich was only liable to IEG in Assuming that the decision is followed, what will be its impact in practice? For the victims of the first instance for 22.08% of the full loss, mesothelioma there will be no change. They will continue to be able to pick an insurer and rather than being responsible on the face require it to answer the claim in full. However, insurers will now be entitled subsequently to of it for all of the loss. seek a contribution from any other insurer, or the defendant itself as a period of self-
insurance. That will allow insurers to recoup some of the losses for which they have had to Lord Mance also discussed the position pay despite not receiving a premium for the entire period of loss. The decision represents a under the Third Party (Rights Against rebalancing of interests. Insurers) Act 1930 in the event that IEG References had been insolvent. He concluded that it was probable that Mr Carré would in such 1 John Hyde, ‘Slater and Gordon Chief: Quindell Will be “Separate Entity”’ (Law Society Gazette, a case have been able to look to Zurich for 19 May 2015)
4 Nick Hilborne, ‘Law Firms and Medical Agencies Launch Judicial Review Over Whiplash Mike Klaiber, disease claims manager at Zurich UK, said in response to the Reforms’ (Litigation Futures, 20 May 2015)
As to the issue of defence costs, Klaiber 8 ibid. said that Zurich accepted the Court’s P AGE | 6
Disclaimer
This newsletter does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to provide an update on issues that may be of interest to those handling occupational disease claims. Specialist legal advice should always be sought in any particular case.
© BC Legal 2015.
BC Legal is a trading name of BC Legal Limited which is registered in England and Wales under company number 08963320. We are authorised and regulated by the Solicitors Regulation Authority. The registered office is 1 Nelson Mews, Southend-on-Sea, SS1 1AL. The partners are Boris Cetnik and Charlotte Owen. More details on the firm can be found at www.bc-legal.co.uk
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Partners: B. Cetnik, C. Owen Registered Office: 1 Nelson Mews, Southend-On-Sea, SS1 1AL BC Legal is a trading name of BC Legal Limited which is registered in England and Wales under company number 08963320 We are Authorised and Regulated by the Solicitors Regulations Authority (SRA No 590579)
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