13 February 2015 Edition 83
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 an insurer has said most NIHL claims fail owing to claimant opportunism and the Most industrial deafness Coventry costs case has been heard in the Supreme Court. claims fail due to opportunism, says insurer This week we present a feature examining the unanimous decision of the Supreme Court that the Welsh Assembly lacks competence to enact the Mesothelioma Act payments Recovery of Medical Costs for Asbestos Diseases (Wales) Bill. increased Any comments or feedback can be sent to Boris Cetnik or Charlotte Owen. PAGE 4 As always, warmest regards to all. Coventry Costs Case heard in the Supreme Court
Quindell negotiations on- going
Slater and Gordon hoovers up more firms
Neuberger laments absence of fast-track fixed fees
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Feature: Supreme Court rules Welsh Assembly lacks competence to enact asbestos bill
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Most industrial NIHL has been described as the new Tracing Office, is doing an increasingly whiplash. good job at tracing insurance policies deafness claims fail due which means sufferers can more easily Mr Harvey said: ‘There is an accepted pursue compensators for a remedy…I am to opportunism, says standard for industrial deafness hearing determined that this success is tests that requires testing to be undertaken maintained, reinforced by regulation from insurer in sound-proofed rooms with specialist the Financial Conduct Authority’. equipment. However, we are seeing The insurer Aviva has said that some 85% evidence of tests being done poorly and Mr Harper added that the Government had of claims made to it for noise-induced conducted in, for example, community also agreed to introduce some ‘additional hearing loss (NIHL) fail to demonstrate any halls and shopping centres. In some safeguards’ to ensure the scheme link to workplace noise-induced hearing cases, no hearing tests are conducted at ‘remains a scheme of last resort’, following loss.1 all.’ discussions with the insurance industry.
Aviva contends that many NIHL cases are Harvey added: ‘We also call on the John Spencer, president of the Association brought by ‘opportunistic lawyers’ looking recently announced Insurance Fraud Task of Personal Injury Lawyers, said for new revenue. Force to recommend a programme of mesothelioma victims needed full reform which will make these claims compensation and ‘should never have Speaking about the impact of NIHL claims, simpler to process and discourage lawyers been penalised’ simply because their the insurer said it received 11,000 claims from submitting weak cases they know are former insurer could not be traced. He in 2014, a four-fold increase since 2009. likely to fail’. said: ‘The Government should be Since 2012 it says it has paid out more applauded for acting quickly to exploit the than £1.2 million to claimants, and £5.5m Mesothelioma Act lower than expected uptake of the to their lawyers. scheme, but it is still highly regrettable payments increased than 100% compensation was not Ian Harvey, senior claims manager at available to all mesothelioma sufferers
Aviva, said: ‘Aviva recognises the from the inception of the scheme’. The Government has announced that it is problems caused by exposure to to increase tariff payments under the damaging levels of noise at work and we Mesothelioma Act 2014 to 100% of the Adrian Budgen, head of the asbestos team do all we can to settle genuine claims at Irwin Mitchell, said that many victims average damages victims would have promptly. People who have been exposed would still in any event receive ‘far less’ achieved in the courts, up from 80%.2 to loud noise throughout their career and than if they had successfully pursued a demonstrate noise induced hearing loss The minister for disabled people, Mark compensation claim through the courts. should be compensated. However, it Harper, said in a written statement to the ‘These victims of asbestos exposure are cannot be right that for every £1 Aviva House of Commons that regulations would suffering for a horrible and aggressive pays to genuine hearing loss sufferers, the terminal cancer through no fault of their be introduced to increase the payments to claimant lawyers receive £5’. own and should not be punished once 100% from 10 February 2015. He again simply because an insurance policy explained that the payment process would He explained: ‘Too many industrial take effect when the regulations become cannot be traced’, he said. ‘We repeatedly deafness cases are submitted by law next month. It will be recalled that the called for the Government to pay out 100% opportunistic personal injury lawyers with of the individual’s entitlement and feel Mesothelioma Act 2014 compensates the support of claims management strongly that at very least the increase in those sufferers of mesothelioma who have companies that actively encourage people the average payment should be backdated been unable to trace an employers’ liability to make claims. They are not serving the to the beginning of the scheme’. insurer. best interests of claimants by submitting claims using poor-quality hearing tests’. Explaining the reason for the increase, Andrew Morgan of Fieldfisher said the increase will ‘reduce the injustices and Harper said: ‘The number of claimants has Aviva set out a raft of reforms that it said ease the financial plight suffered by proven to be below the level anticipated. I would improve the claims process, eligible mesothelioma sufferers and their made it clear through the passage of the including fixed legal fees, expanding the Mesothelioma Act that I planned to monitor families’. However, he said there was still claims portal to include multi-defendant the scheme to gauge the extent that the some distance to go: ‘The scheme does claims and establishing a panel of not cover mesothelioma sufferers who assumption made when it was being set independent hearing loss experts ‘to were exposed outside work, nor does it up has been borne out in practice, and reduce spurious and fraudulent claims’. It cover asbestos-related lung cancers or would also consider the impact on the is interesting to note that the introduction other fatal industrial diseases. We call on insurance companies who pay for it. of these reforms would closely align the the Government to extend the scheme to treatment of NIHL claims with whiplash ‘It is already clear that the insurance cover everyone who is suffering terminal claims. This is unsurprising given that industry, through its Employer Liability illness as a result of someone else’s P AGE | 3
negligence’. Gordon’s headcount by approximately 200, Quindell negotiations with the addition of five offices. Both firms Coventry Costs Case on-going will be dual branded for the next year.
heard in the Supreme In 2015, Slater and Gordon said is it Quindell has sought to reassure investors looking to the UK to provide 45% of the that sale talks with claimant leviathan Court company’s revenue – about £115 million – Slater and Gordon have not decayed.4 with a profit margin of 23-24%. The firm
The highly awaited rehearing of Coventry v revealed that for the first part of the year, its In a statement to the stock exchange, Lawrence has taken place in the Supreme UK operation has contributed almost £60 Quindell said: ‘Contrary to speculation, Court this week.3 million turnover and £14 million in profit. the exclusivity arrangements with Slater
and Gordon Ltd in respect of the possible It will be recalled that the case is set to Speaking about the acquisitions, managing disposal of an operating division of the determine whether the pre-Jackson regime director Andrew Grech said: ‘In the UK we group continue and discussions are of recoverable success fees and after the are making substantial progress towards ongoing’. event (ATE) insurance premiums under our objective of becoming a leading the Access to Justice Act 1999 infringes consumer law firm. We have now secured However, while it affirmed ongoing talks, article 6 and article 1 of Protocol 1 of the a strong direct-to-consumer base, and see the firm cautioned that there was still no European Convention on Human Rights substantial capacity for growth. In addition guarantee that any agreement would be (ECHR). to this, we are also seeing opportunities reached. It said: ‘There can be no open up in other channel of new business certainty that these discussions will lead The case was heard for two-and-a-half generation which are under assessment’. to an offer for, or the disposal of, an days this week, on Monday, Tuesday and operating division of the group’. Thursday, by a panel of seven Justices: The statement also confirmed ongoing talks president of the Supreme Court Lord with Quindell. Neuberger, deputy president of the Slater and Gordon Supreme Court Lady Hale, Master of the Rolls Lord Dyson, former Master of the hoovers up more firms Neuberger laments Rolls Lord Clarke, and Lords Mance, absence of fast-track Sumption and Carnwath. The claimant personal injury giant that is Slater and Gordon has hoovered up fixed fees Eight interveners were given permission to another two firms as it continues its 5 intervene in the case: the Secretary of strategy of acquisition. The president of the Supreme Court has State for Justice, the Asbestos Victims said that it is ‘more than disappointing’ that Support Groups Forum UK, the General The firm has announced that it is over four years after the Government Council of the Bar, the Law Society, the imminently to take over Walker Smith backed the Jackson reforms ‘we still do not Association of Business Recovery Way and Leo Abse and Cohen. have fixed costs for all fast-track cases’.6 Professional, the Department of Justice for Northern Ireland, the Media Lawyers The acquisition of Walker Smith Way, Lord Neuberger said he hoped fixed costs Association and the Association of Costs which has forecast annual revenue of could be extended further to ‘smaller mutli- Lawyers. Interveners were generally £10.3 million, is due to complete in April. track cases’, such as building disputes permitted half an hour to put their points, Four offices will transfer to Slater and which could not be settled quickly out of although the Secretary of State for Justice Gordon. court. Many disease claims are also was given two hours. examples of smaller multi-track claims. Leo Abse and Cohen has expertise in Once legal representatives for the NIHL claims and has forecast annual His Lordship said: ‘When I was Master of interveners are accounted for, there were turnover of £8.4 million. The deal is set to the Rolls, I said publicly on a couple of a total of 23 advocates before the complete in May. occasions that, if we could not achieve Supreme Court. This – along with the proportionate costs through our current panel of seven Justices – indicates the Slater and Gordon is spending a total of systems, then we may have no alternative importance of the case. £18.7 million on both acquisitions. This but to go over to fixed costs…Although they comprises £10.4 million in cash at represent significantly rougher justice than Should the pre-Jackson regime – which completion (including extinguishment of the costs management route, they have the still applies in a significant number of debt) and £3.7 million in equity, plus £4.6 advantage of consistency across the remaining pre-Jackson cases – be found million in deferred and conditional shares system and no extra costs and time in to have violated the ECHR then it could two years after completion. preparing and considering costs budgets’. have very significant consequences for the Government. The acquisitions will increase Slater and Speaking in Manchester, the president of P AGE | 4
the Supreme Court said fixed costs were an asbestos-related disease are required to ‘desirable throughout the fast-track’ Feature: Supreme reimburse the Welsh government for the because of the importance of costs control Court rules Welsh costs expended by the NHS in treating the and proportionality. ‘We are still waiting on victim. Employers’ liability insurance policies the Ministry of Justice to achieve this, Assembly lacks would be treated as having to respond to although it is fair to record that there is the requirement to reimburse the Welsh now a fixed costs system in place for fast- competence to enact government. track personal injury cases’, he said. asbestos bill Although the Bill was passed on 20 Lord Neuberger continued: ‘Fixed costs November 2013, it did not immediately throughout the fast-track was one of Introduction receive Royal Assent. The Counsel General Rupert Jackson’s recommendations which for Wales, Theodore Huckle QC, referred was accepted more than four years The Supreme Court has ruled this week the Bill to the Supreme Court for a ago…Particularly bearing in mind the that the Welsh Assembly does not have determination on whether the Bill was within government’s fundamental duty to enable legislative competence to enact the the Welsh Assembly’s legislative access to justice and their swingeing cuts Recovery of Medical Costs for Asbestos competence – a devolution matter. The in civil legal aid, it is more than Diseases (Wales) Bill. Assembly’s legislative competence to disappointing that after all this time, we still promulgate the Bill had been persistently do not have fixed costs for all fast-track In this article we consider what the Bill questioned by insurers. cases’. would have legislated for, what the costs implications would have been, and the On referring the Bill, Mr Huckle said: ‘Before Lord Neuberger emphasised the judgment of the Supreme Court. the Supreme Court I will contend strongly importance of proportionate costs, saying that the Bill is within the Assembly’s their importance could not be overstated: The Recovery of Medical Costs for legislative competence…However, making ‘If Mr Abramovitch and the late Mr Asbestos Diseases (Wales) Bill a reference before it receives Royal Assent Berezhovsky wished to spend millions of enables the matter of the Bill’s competence pounds on legal fees fighting about The Welsh Assembly passed the Recovery to be determined without awaiting what I hundreds of millions of pounds’ worth of of Medical Costs for Asbestos Diseases consider would be the inevitable challenge assets, that’s fine with me – although I (Wales) Bill on 20 November 2013.7 It was in potentially far more expensive court may be a bit green-eyed about the a private member’s bill introduced by proceedings in due course, perhaps when lawyers’ fees and there is a serious Assembly Member Mick Antoniw, a former substantial amounts of money had been argument to be had about the current level partner at Thompsons. recouped under the Bill’s provisions and of court fees in that sort of case. would quite likely be subject to repayment For these purposes, the provisions of were the decision of the courts to be ‘The costs, though eye-watering to many, importance are clauses 2 and 14. Clause 2 adverse…The litigation costs of a reference were proportionate and the parties could provides: ‘Where a compensation payment being made during the intimation period are look after themselves…But if my builder is made to or in respect of a person (the likely to be less than the costs of any wants to claim £30,000 for work done to “victim”) in consequence of any asbestos- challenge brought once the Bill is enacted my house and I contend that his work is related disease suffered by the victim, the under the usual judicial review procedure, valueless and want to counterclaim for person who is, or is alleged to be, liable to as Supreme Court rules provide that orders £20,000 for damage he allegedly caused, any extent in respect of the asbestos- for costs will not normally be made in favour the costs of the resultant four-day case related disease and by whom or on whose of or against interveners [such as insurers’ with many witnesses of fact, expert behalf the compensation payment is made representative]…It is in my view in the evidence, disclosable documents, legal is liable to reimburse the Welsh Ministers public interest for me to take the initiative in argument, means that we would both be in respect of any relevant Welsh NHS seeking the Supreme Court’s decision on mad to contemplate litigation’. services provided to the victim as a result the Bill as it stands’.8 of the asbestos-related disease’. Lord Neuberger said fixed costs could be Costs Implications extended to apply to smaller multi-track Clause 14 confirms that where the cases if they could not be settled by defendant’s liability is covered by a policy In the event that the Bill was passed into techniques like online dispute resolution or of insurance, the policy is to be treated as law, it was clear that it would have had early neutral evaluation. covering the defendant’s liability to make significant costs implications for payments to the Welsh Government under compensators and insurers. It had been the Act. estimated that the gross annual recovery under the scheme would have been £2.03 In short, the Bill would enact a scheme million.9 The actual cost of treating each whereby those compensating a victim of patient was estimated at an average of
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£23,999 per patient. In the case of 11 patients the total costs significantly restructured both the consequences of actual or were £256,291. The highest cost for one patient was £53,035, a possible negligence or breach of statutory duty committed long consequence of significant inpatient treatment. The costs are ago by compensators, and the terms of and liabilities attaching shown in the following table:10 under insurance policies also underwritten years ago to cover any such negligence or breach of statutory duty ([7]).
He explained that the Supreme Court was required to determine, firstly, whether the Bill’s provisions came within the legislative competence of the Welsh Assembly concerning the ‘organisation and funding of [the] national health service’ under the Government of Wales Act 2006 (GOWA) (sections 108(4)-(5) and paragraph 9 of Part 1 of Schedule 7), and, secondly, if they did, whether the Bill was nevertheless outside the legislative competence of the Assembly by reason of section 108(6) of the 2006 Act, on the ground that it was incompatible with the rights of compensators and insurers under article 1 of Protocol 1 of the European Convention on Human Rights (ECHR) to peaceful enjoyment of their possessions ([9], [35]).
As to the first issue, Lord Mance said the critical phrase, in It was said that a tariff scheme would have been used in practice determining the legislative competency of the Welsh Assembly to to avoid the administrative expense of determining actual enact the Bill, was ‘Organisation of funding of the National Health treatment costs in each case. Applying the tariffs used in personal Service’ in paragraph 9 of Part 1 of Schedule 7 to the GOWA injury cases, the impact assessment for the Welsh Bill showed 2006 ([13]). It was common ground that Welsh Ministers do not the following costs: have general fiscal powers ([17]) and even assuming – without deciding – that the Welsh Assembly had competence to levy charges for Welsh NHS services, the Bill was not sufficiently ‘related to’ the ‘organisation of funding of the National Health Service’ under section 108(4) of the GOWA 2006 to come within that competence. The charges provided for by the Bill were to be imposed on compensators and insurers rather than patients and lacked any direct or close connection with the provision of Welsh NHS services. The Bill sought to impose what were in effect new tortious or statutory duties on third parties to pay for the relevant Welsh NHS treatment ([24], [27]).
As a result of the decision on the first issue, the second issue did not strictly arise for consideration. Nevertheless Lord Mance expressed his views. His Lordship held that the Bill interfered with the article 1 of Protocol 1 rights of compensators and insurers to
the peaceful enjoyment of their possessions. The new financial The average was slightly increased to £25,361 per case and it liabilities of compensators and insurers imposed by the Bill would was this figure that was used to determine the total £2.03 million arise from asbestos exposure and liability insurance policies recovered sum, based on 80 mesothelioma cases each which long pre-dated the Bill ([36], [41]). The retrospective effect (determined from CRU data and settlements in Wales).11 It was of the Bill required special justification and that was absent in the said that an appropriate tariff would be developed. present case ([53], [57] and [65]-[69]).
The Judgment of the Supreme Court Lord Thomas (with whom Lady Hale agreed) concurred with the result in the judgment of Lord Mance, but for significantly narrow The Supreme Court heard the case on 14 and 15 May 2014 and reasons. Lord Thomas agreed that the Bill was beyond the judgment was handed down on 9 February 2015. It unanimously competence of the Welsh Assembly, but on narrower grounds. He ruled that the Bill is outside the legislative competence of the held that clause 2 of the Bill was within the competence of the Welsh Assembly. The judgment can be read here. Welsh Assembly, because the “organisation of funding of the National Health Service” encompasses a general power to raise Giving the leading judgment, Lord Mance (with whom Lords funds for the Welsh NHS through the imposition of charges on Neuberger and Hodge agreed), noted that the Bill would impose patients, who could recover those charges from an employer who new ‘quasi-tortious’ liabilities on compensators in respect of past had exposed him to asbestos. The employer could then claim conduct and on liability insurers under past insurance contracts; indemnification from its liability insurer ([83], [96]). It was therefore although it was not retrospective in the fullest sense, it PAGE | 6
open to the Welsh Assembly to impose charges directly on the 3 Neil Rose, ‘Scene Set for Coventry – With Eight Interveners and employer/compensator ([100]-[102]). Further, the interference of 23 Advocates’ (Litigation Futures, 6 February 2015) the Bill with the article 1 of Protocol 1 rights of
GOWA 2006 and the article 1 of Protocol 1 rights of insurers 2015. ([133] and [138]-[140]).
5 John Hyde, ‘Slater and Gordon Reveals Double UK Acquisition’ Discussion and Conclusion (Law Society Gazette, 10 February 2015)
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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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