NEWS UPDATE FOR PERSONAL INJURY PROFESSIONALS. Supreme Court delivers landmark ruling in mesothelioma case

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1 Butterworths Personal Injury Newsletter XXXXX XXXXX XXXXXXXXXXX May 2012 Vol 4 Issue 5 NEWS UPDATE FOR PERSONAL INJURY PROFESSIONALS HSE Myth Busters Challenge Panel launched Acrackdown on jobsworths who wrongly use health and safety as an excuse to stop what are essentially sensible activities, has been welcomed by the Association of Personal Injury Lawyers (APIL). The Health & Safety Executive (HSE) has set up the independent Myth Busters Challenge Panel (see www. lexisurl.com/pin12318) headed by HSE chair Judith Hackitt which will provide advice on whether regulations have been misused. The HSE said: This panel will look into complaints regarding the advice given by non-regulators such as insurance companies, health and safety consultants and employers and quickly assess if a sensible and proportionate decision has been made. We want to make clear that health and safety is about managing real risks properly, not being risk averse and stopping people getting on with their lives. APIL chief executive, Deborah Evans, said: Ridiculous health and safety myths have been allowed to thrive for too long. These misunderstandings and misinterpretations of health and safety rules often go hand-in-hand with an unsupported fear of litigation. I hope this new panel will help to generate a clearer public understanding of health and safety rules and also help to generate a more serious debate about our litigation system so people understand they cannot sue or be sued for any old mishap. Supreme Court delivers landmark ruling in mesothelioma case The trigger under relevant employer s liability (EL) insurance policies for mesothelioma claims is the date on which the victim was exposed to asbestos fibres, and not the date on which the victim first shows signs of the disease, the Supreme Court has held. The ruling in BAI v Durham [2012] UKSC 14 also known as the EL Insurance Trigger Litigation re-instates the longstanding practice of causation which was thrown into doubt by the Court of Appeal s ruling in Bolton v MMI [2006] EWCA Civ 50. In Bolton the appeal court ruled that injury was held to occur at the point where the disease began to manifest. This shifted the insurer s responsibility from the time of exposure to the time when the tumour developed. In Durham, Lord Mance said insurance contracts should be interpreted in line with their commercial intentions. He acknowledged that the word sustained appears to address the impact of the accident or disease on the employee but held that the underlying focus of the insurance cover is on the employees and the activities current during the insurance period. The cover would be potentially incomplete, and employers would be potentially exposed to uninsured risks, were sustained to be understood as meaning developed or manifested. Law Society issues call for evidence on proposed personal injury cuts The Law Society is asking personal injury practitioners to provide information on the financial costs of running a typical personal injury practice or department in a bid to fight more cuts proposed by the government. The Ministry of Justice has issued a call for evidence which outlines proposals that aim to reduce the costs successful litigants can recover from defendants in personal injury claims. Proposals put forward by the government include measures to: reduce the current road traffic accident (RTA) portal fees because of efficiency savings and the ban on referral fees; increase the limit on the value of claims that can be pursued through the RTA Portal from 10,000 to 25,000; introduce an electronic portal process with fixed costs for public and employer liability claims with a value up to 25,000; review the existing predictable costs regimes for cases that fall outside any portal scheme; and review the guideline hourly rates. The Law Society is urging senior members of personal injury firms to provide the data it needs to make the best case possible on behalf of personal injury solicitors when it responds to the govenerment s call for evidence. The society has engaged Otterburn Legal Consulting to undertake a survey of personal injury firms on its behalf. The survey can be downloaded at: personalinjuryquestionnaire. xls. Andrew Short, associate at Addleshaw Goddard LLP, said the decision should be welcomed by both policyholders and by the insurance market (save perhaps for certain insurers in run-off). It provides some much needed clarity on the treatment of asbestos-related claims under EL covers, which should save an enormous amount of time and cost in preventing any future disputes on this point. He added: Employers can now in principle recover from their EL insurers that were in place at the time the relevant individual or individuals were exposed to asbestos. This will be a great relief, since employers should no longer face the prospect of self-funded mesothelioma liabilities. Contents Determining the discount rate 2 In practice 3 Case digests 6 Legislation update 8 Editor: Lucy Trevelyan lucy.trevelyan@lexisnexis.co.uk Designer & Typesetter: Heather Pearton heather.pearton@lexisnexis.co.uk Customer Services: customerservices@lexisnexis.co.uk Publishing Director: Simon Collin Published by LexisNexis, Halsbury House, 35 Chancery Lane, London WC2A 1EL All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission in writing of the publishers. Printed by Headley Brothers Ltd. ISSN: X Personal Injury Newsletter 1

2 Determining the discount rate Determining the discount rates Does a recent Guernsey case heard by the Privy Council have implications for personal injury cases on the mainland? Cara Guthrie and Will Young report The decision of the Privy Council in the case of Simon v Helmot [2012] UKPC 5 (handed down on 7 March 2012) provides illumination on the issue of the appropriate discount rate to be applied to lump sum damages for future losses in personal injury cases, albeit from the perspective of Guernsey. In Guernsey, the Damages Act 1996 does not apply. Hence the courts there are not obliged to consider the discount rate of 2.5% set by the Lord Chancellor in 2001 when determining the discount to be applied to the multiplier in cases involving future losses; nor can the Guernsey courts award, or the parties agree, damages for future loss payable by way of periodical payments index-linked to an appropriate index. Rather the court in Guernsey follows the common law position of Wells v Wells [1999] 1 AC 345. Strong evidence In Helmot the Royal Court heard evidence from a forensic accountant, an actuary and an economist, described by Sumption JA (as he then was) in the Guernsey Court of Appeal as strong unchallenged evidence. The effect of that evidence was that the rate of return that could be expected from investments in risk-free index-linked government securities (ILGS) was significantly below the rate embodied in the chancellor s discount rate of 2.5%. The evidence was that the ILGS yields after tax and the higher rate of prices inflation in Guernsey would be 0.5%, and that wage inflation would be likely to exceed price inflation such that the discount rate should be further reduced by 2% to -1.5% for earnings-related losses. This evidence was not accepted by the Royal Court at first instance (although it did depart from the 2.5% standard UK discount rate) but was accepted by the Court of Appeal, which ordered that the discount rate for losses which are not earnings-related should be 0.5% and that earnings-related losses such as loss of earnings and future cost of care should be -1.5% (ie, the lump sum should be adjusted upwards for accelerated receipt). The defendant argued on appeal to the Privy Council that the economic theory on which these findings were based was insufficiently certain to justify such an award, and that there should be a single discount rate for all heads of loss. Both of these arguments were rejected by the Privy Council, which held that the law has never demanded absolute precision in the calculation of future damages, and that the principle of full compensation means that, if there is sufficient evidence to show that different heads of loss will be differently affected by economic factors, this may be reflected in the approach to the discount rate(s) applied. To our minds, their Lordships endorsed the following propositions: a discount rate of 2.5% no longer achieves the principle of full compensation; and a periodical payment order (PPO), appropriately indexed, is better able than a lump sum award to achieve the principle of full compensation. Useful for claimants We think the reasoning of their Lordships provides useful material for claimants seeking to challenge the Lord Chancellor s discount rate of 2.5% under the Damages Act 1996, s 1(2). The relevant provisions of s 1 of the 1996 Act provide: (1) In determining the return to be expected from the investment of a sum awarded as damages for future pecuniary loss in an action for personal injury the court shall take into account such rate of return (if any) as may from time to time be prescribed by an order made by the Lord Chancellor. (2) Subsection (1) above shall not however prevent the court taking a different rate of return into account if any party to the proceedings shows that it is more appropriate in the case in question. The test as to when it might be appropriate to depart from the Lord Chancellor s discount rate set under the Damages Act 1996, s 1(1) is set out in the judgment of Dyson LJ in Warriner v Warriner r [2002] 1 WLR 1703 CA, (para 33) and endorsed by Law LJ in Cooke: We are told that guidance is needed as to the meaning of more appropriate in the case in question in section 1(2). The phrase more appropriate if considered in isolation, is open-textured. It prompts the question: by what criteria is the court to judge whether a different rate of return is more appropriate in the case in question? But the phrase must be interpreted in its proper context which is that the Lord Chancellor has prescribed a rate pursuant to s 1(1) and has given very detailed reasons explaining what factors he took into account in arriving at the rate that he has prescribed. I would hold that in deciding whether a different rate is more appropriate in the case in question, the court must have regard to those reasons. If the case in question falls into a category that the Lord Chancellor did not take into account and/or there are special features of the case which (a) are material to the choice of rate of return and (b) are shown from an examination of the Lord Chancellor's reasons not to have been taken into account, then a different rate of return may be more appropriate. No successful challenge It is right that no challenge to the Lord Chancellor s discount rate has yet been successful. The heavy burden of taxation on a large lump sum settlement was rejected as a reason to adopt a different rate in Warren v Northern General Hospital NHS Trust [2000] 1 WLR Personal Injury Newsletter

3 Determining the discount rate/ In practice CA; the reduction in rates of return from investment in ILGS and the effect thereof on claimants with a long life expectancy and damages exceeding 3m met a similar fate in Warriner; and the argument (from the same accountant who appeared in Helmot, Mr Hogg) that wage inflation in excess of increases in the RPI meant that future losses were undercompensated by the chancellor s rate fared no better in Cooke v United Bristol Healthcare [2004] 1 WLR 251. The Court of Appeal in Warriner indicated than any direct assault on the chancellor s rate by way of evidence of a divergent economic reality was impermissible, and Cooke closed the door on anything that might be characterised as an indirect assault on it. However, underlying the decisions in the above cases was an acceptance by the Court of Appeal that a single discount rate of 2.5% provided full compensation, in a rough and ready way, for claimants. Their Lordships in Helmot have acknowledged that this premise no longer holds true in cases where damages for future care and loss of earnings are awarded by a lump sum. Further, in the light of Sarwar v Ali [2007] EWHC 1255 and Thompstone v Tameside and Glossop Acute Services NHS Trust [2008] 1 WLR 2207, the legal landscape has changed and, as recognised by their Lordships in Helmot, considerable advantages accrue to the majority of claimants who are able to recover periodical payments for future care and loss of earnings. However, a PPO for future losses will not be possible or desirable in all cases. Some defendants cannot offer the security rightly demanded by the courts. Some claimants, for example those who have been contributorily negligent, have needs which could not be met by a PPO, even for a period. Hence it seems to us that there might be scope for arguing that the discount rate should be less than 2.5%, or that there should a lower discount rate for future care and future loss of earnings, in cases where the option of a PPO for future care and future loss of earnings is not open to a claimant. Implications of Helmot We feel that in the light the decision of the Privy Council in Helmot, there are decent prospects of the court giving a claimant permission to rely on the necessary expert evidence to support an application under s 1(2). We are not so bold as to attempt to predict the eventual outcome of such an application. However, we do observe that in the time necessary to gather the expert evidence, the Lord Chancellor may finally complete his present review of the discount rate. Helmot is also likely to add to the pressure on the current Lord Chancellor to revise the 2.5% discount rate downwards Asbestos: duty of care Karen O Sullivan outlines the duty of care surrounding risks created by asbestos exposure The establishment of a duty of care will not usually be problematic. Employers clearly owe a common law duty of care to their employees. That duty encompasses an obligation not to negligently expose employees to the risk of development of an asbestos-related disease. Since 1931 there have been an everincreasing number of statutory duties imposed on employers in respect of the risks created by asbestos exposure. While not quite as straightforward, few difficulties ought to be encountered in establishing a duty of care to selfemployed workers and subcontractors who are invited onto a site or into a factory by the owner/occupier. The House of Lords gave a clear and positive steer in this regard in Barker v Corus (UK) and other appeals [2006] 3 All ER 785. A duty of care is also, generally, owed to individuals living in the area of an asbestos processing plant (see Margerson & Hancock v JW Roberts [1996] PIQR P154). Finally, judicial consideration has been given to whether a duty of care is owed to family members who may have been exposed to asbestos dust brought home on the clothes of employees directly working with asbestos (Hewitt v Alf Brown s Transport [1992] ICR 530). There have been competing decisions, with the key issue being foreseeability that the dust would be transferred home and that it in the light of the prevailing economic circumstances. The Privy Council s statement that, in Guernsey, absent the strictures of the Damages Act 1996, the evidential value of the 2001 discount rate determination had been wholly undermined by the passage of time, and the Court of Appeal s view that, without the Act, the 2001 determination was not even good evidence of the appropriate rate of return due to the dramatic decline in yields on fixed interest securities, are likely to add some judicial imprimatur to the arguments of those pressing for a reduction of the discount rate. The decision also gives the stamp of exalted judicial approval to the argument that, in the current economic situation, the principle of full compensation, if given free rein and loosed from the strictures of the Damages Act 1996, would justify a significantly reduced discount rate for future loss. The decision cannot but reduce the prospects of the Lord Chancellor successfully defending a discount rate of 2.5% in any judicial review proceedings. The statutory discount rate of 2.5% therefore remains for the moment, but pressure for its revision downwards increases. Cara Guthrie and Will Young Barristers Outer Temple Chambers would/may create a risk of development of disease by the family member (see Maguire v Harland & Wolff f [2005] All ER (D) 242 (Jan); Gunn v Wallsend Slipway (1989) Times, 23 January) There is no doubt that a duty of care would now be found, given the advanced state of knowledge of and research on the dangers posed by asbestos exposure. The contentious issue, given the lengthy latent period, is when such a duty of care arose. It seems likely that there will be further litigation on that issue in the future. Breach of duty: common law Often, the most difficult hurdle to overcome in establishing a breach of the duty of care is the evidential issue of proving that a claimant was exposed to asbestos and then by whom. There is usually a lengthy latent period (of up to 40 years) between the exposure to asbestos and the development of symptoms. Memories as to the exact projects worked on (and, indeed, employers worked for) may have faded Personal Injury Newsletter 3

4 In practice considerably over that period. Employers may not have retained any relevant records, even if the company is still trading. The starting point is a detailed witness statement from the proposed claimant. A detailed proof should be taken as soon as possible, particularly if the potential claimant has a terminal condition. Even with a detailed account from the proposed claimant, actual evidence of asbestos exposure is often problematic. Sometimes one is effectively left with working backwards from a diagnosis of mesothelioma which will almost certainly be caused by exposure to asbestos combined with the claimant s account and the difficulties that the defendant will have in producing evidence to dispute that account. On the assumption that asbestos exposure can be established, the next issue in respect of breach of the common law duty of care is the date of guilty knowledge of the employer (ie, the date on which the employer knew, or, more frequently, ought to have known, of the risks posed by exposure to asbestos). Although there are a few specific authorities that suggest that certain large and well-resourced companies ought to have been aware of the risks of extensive exposure to asbestos dust prior to the 1960s (see eg, Shell Tankers v Jeromson [2001] All ER (D) 24 (Feb)), that is generally taken to be the time at which a reasonable employer ought to have been aware of the danger (at the very least the risks posed by regular, as opposed to occasional, exposure). Knowledge of the dangers of asbestos had developed steadily from the 1930s with a sudden explosion on the publication on 11 February 1965 of the Newhouse and Thompson paper in the British Journal of Industrial Medicine. This study considered 83 patients from the London Hospital who had been diagnosed with mesothelioma over 50 years. The authors reported on the repeated incidence of the disease following domestic or secondary exposure (commonly where a wife had washed her husband s work overalls) and concluded there seems little doubt that the risk of mesothelioma may arise from both occupational and domestic exposure to asbestos. This demonstrated that even slight exposure to asbestos created a risk of mesothelioma. This paper was publicised more widely by an article Scientists track down a killer dust disease in the Sunday Times on 31 October This is often taken to be the general starting point of the dissemination of the knowledge of the risks including low levels of exposure. Thus, the mid-1960s can, generally, be taken as the point at which it became reasonably foreseeable to employers (on the basis that they knew or ought to have known) that exposure to asbestos dust carried with it the risk of development of disease. However, even from the mid-1960s there are a few authorities that would suggest that much will still depend on the type of employer and the level of exposure to asbestos. If the exposure was modest then it is still possible, it would seem, for employers to argue that the Table 1 Regulations/Act Date in force Date revoked Asbestos Industry Regulations Factories Act Occupiers Liability Act Still in force Factories Act Still in force Asbestos Regulations Asbestos Products (Safety) Regulations Still in force Asbestos (Prohibitions) Regulations Control of Asbestos at Work Regulations Control of Asbestos at Work Regulations (Amendment) Regulations 1992 Asbestos (Prohibitions) Regulations Control of Asbestos at Work Regulations Control of Asbestos at Work Regulations Control of Asbestos Regulations Still in force risk was not reasonably foreseeable at that time. Two recent decisions show the difficulty in showing the risk of injury was foreseeable, particularly in low-level exposure cases. In Asmussen v Filtrona United Kingdom Ltd [2011] EWHC 1734 (QB) the claim was dismissed: it was held that the employer had not been under any tortuous or statutory obligation to take precautions to protect the claimant from exposure as on the general knowledge at the time the claimant was exposed meant that the risk of injury was not foreseeable. The claimant worked for the defendant employer between and in a factory in which pipes that were 20 feet above the factory floor were lagged with asbestos material. Some asbestos dust and fibres might have been released during repairs to the lagging or during cleaning. The test for liability was held to be that of a careful employer and what, on the information at the time, precautions he should have taken or advice he should have sought about the appropriate precautions to take. Similarly in Williams v University of Birmingham & Anor [2011] EWCA Civ 1242 the appellant university (U) successfully appealed against a decision that it was liable to the estate of a former student (W) who was exposed to asbestos during his final year in It was held that on the state of knowledge at the time W was exposed to asbestos fibres, it had not been shown that U ought reasonably to have foreseen that W would be exposed to an unacceptable risk of asbestos-related injury. As regards allegations of breach of the common law duty, consideration should be given to the following primary allegations when drafting the particulars of negligence, each of which will need to be carefully explored with the potential claimant and any witnesses: failure to provide adequate ventilation; failure to provide adequate extraction equipment to remove asbestos dust; allowing the employee/worker to work with asbestos materials; failure to provide respirators; failure to give warnings regarding the danger posed by asbestos dust; failure to provide suitable overalls and head covering. Breach of duty: statutory obligations There have been statutory regulations in place controlling the exposure of employees to asbestos since the 4 Personal Injury Newsletter

5 In practice introduction of the Asbestos Industry Regulations 1931 (SI 1931/1140). The obligations and categories of individual to whom they apply have been gradually expanding since then. We now have a comprehensive set of regulations governing almost all situations (outside the domestic context) where individuals might be exposed to asbestos (see below). Given the lengthy latent period between exposure and development of asbestos-related disease, it is often necessary to rely on regulations that have subsequently been repealed. Table 1 (previous page) shows the: main applicable acts/regulations to be considered when pursuing asbestos exposure litigation; date on which the acts/regulations came into force; and date on which they were repealed (if applicable. Once the periods of employment/ exposure have been ascertained from the claimant, detailed consideration must be given to the particular legislation that applies to that period. The following summary of the primary provisions may be helpful. Asbestos Industry Regulations 1931 The Asbestos Industry Regulations 1931 (SI 1931/1140) applied only to occupiers of factories and to specific, defined processes involving asbestos (including sawing, breaking, crushing, grinding, mixing and manipulation). Importantly, they did not apply to work on a building site or when undertaking engineering works (both common sources of asbestos exposure). The main duties created by these regulations were: Exhaust draughts: to install and maintain mechanically powered exhaust draughts to prevent the escape of asbestos dust into any area in which employees were working (regs 1 3). Storage: to store loose asbestos in areas away from the main workplace (reg 4). Containment: to ensure that machines used to process/cut/grind/etc asbestos had an effective dust extraction system (reg 5). Cleaning: to ensure that floors, workbenches etc were kept free from asbestos dust and debris (reg 7). Breathing apparatus: to be provided, but only to those involved in: cleaning machines used to process asbestos; workplaces containing loose asbestos; and filling or beating insulating mattresses containing asbestos (reg 10). Asbestos Regulations 1969 The Asbestos Regulations 1969 (SI 1969/690) applied to all processes involving asbestos in most work settings, including factories, ships and building operations and engineering construction. They imposed duties similar to those in the 1931 Regulations, such as the duty to provide exhaust ventilation (reg 7), protective equipment (reg 8) and, where possible, cleaning by dustless methods (reg 10). They also imposed an absolute limit on asbestos dust concentration of 0.2 fibres/ml for crocidolite and 2 fibres/ml for amosite and chrysotile. The operation of the 1969 Regulations was considered by the House of Lords in 1989 where process was given a wide definition: it was held that a process is any operation or series of operations involving some degree of continuity and repetition of a series of acts being an activity of more than minimal duration. An example of this includes sweeping up asbestos dust (see Nurse v Morganite Crucible [1989] 1 All ER 113; Edgson v Vickers [1994] ICR 510). Control of Asbestos at Work Regulations 1987 The Control of Asbestos at Work Regulations 1987 (SI 1987/2115) contained similar obligations to the 1969 Regulations save that the absolute limits on asbestos dust concentration were reduced to 0.5 fibres/ml for chrysotile and 0.2 fibres/ml for other forms of asbestos. Control of Asbestos at Work Regulations 2002 The 2002 Regulations (SI 2002/2675) provided comprehensive protection to those at risk of exposure to asbestos while at work. In summary, the regulations imposed a duty to: Undertake a risk assessment in respect of all work involving potential exposure to asbestos (reg 6). Produce a detailed plan of work whenever exposure to asbestos could occur (reg 7) Provide information and training to all employees who may be exposed to asbestos (reg 9). Prevent exposure to asbestos so far as reasonably practicable and, if that is not practicable, to reduce the risk from that exposure to the lowest level reasonably practicable: strict control limits are imposed (reg 10(1)). Provide adequate ventilation (reg 10(3)). Provide suitable respiratory equipment (reg 10(4)). Provide suitable protective clothing and suitable means by which to clean it (reg 13). Keep the workplace in a clean state, free from asbestos dust (reg 16). Provide adequate and suitable washing and cleaning facilities (reg 22). Control of Asbestos Regulations 2006 The most recent regulations (SI 2006/2739) came into force on 13 November 2006, (save for reg 20(4), which came into force on 6 April 2007). They generally cover Great Britain, but also extend to any work outside Great Britain to which the Health and Safety at Work etc Act 1974, ss 1 59 and apply. The regulations apply to the selfemployed as well as to employers/ employees. This is achieved by reg 3(1) deeming a self-employed person both an employer and an employee. The duties imposed on employers (including selfemployed individuals) extend, so far as is reasonably practicable, to any person, whether at work or not, who may be affected by the work activity to be carried out by the employer or self-employed individual (reg 3(4)). Given the latent periods between exposure and development of an asbestosrelated condition, it is likely that it will be many years before these regulations are used in personal injury claims. The main duties imposed under the 2006 Regulations can be summarised as follows: A duty is imposed on any person who has, to any extent, control of non-domestic premises to conduct and record a suitable and sufficient assessment to ascertain whether asbestos is present or is likely to be present. Assessments require review on any significant change in the premises (reg 4(3)). Where the assessment in reg 4(3) reveals the presence of asbestos, there is a duty to conduct and record a risk assessment together with a management plan for the control of exposure. The risk assessment and management plan must be reviewed at regular intervals (reg 4(7)). An employer undertaking demolition, maintenance or any other work that is likely to expose an employee to Personal Injury Newsletter 5

6 In practice/ Case digests asbestos must carry out and record a risk assessment. Regulation 6 sets out the detailed requirements regarding what the risk assessment must include. The risk assessment must be reviewed at regular intervals (regs 5, 6). No work with asbestos can be carried out without a suitable, written plan of work. There are detailed requirements regarding what the written plan must contain (regs 7(1), 7(4)). In cases of final demolition or major refurbishment, so far as reasonably practicable, asbestos should be removed before any other major work begins (reg 7(3)). No work with asbestos (unless the exposure is below the control limit or is sporadic and of low intensity) can be undertaken without a licence granted by the Health and Safety Executive (HSE). To facilitate the licensing regime, there is a requirement to notify the HSE at least 14 days before works are due to commence. The particulars of what information must be given in the notification are set out in Sch 1 (regs 3(2), 8, 9). Employers are under an obligation to provide adequate information, instruction and training to employees who are likely to be exposed to asbestos. The information, instruction and training must be given at regular intervals and when significant changes occur (regs 10(1), 10(2)). There is an overriding duty for employers to prevent exposure to asbestos so far as is reasonably practicable and reduce it to the lowest practicable level where it is not. This must be done, in order of priority, by: controlling the release of asbestos; controlling exposure through ventilation systems and organisational methods; the provision of respiratory protective equipment (regs 2, 11(5)). Employers must take all reasonable Case digests Simon v Helmot [2012] All ER (D) 215 (Mar); [2012] UKPC 5 30 March 2012 Damages Personal injury Amount of damages Discount made for future pecuniary loss Respondent sustaining serious injuries in Guernsey following collision with car driven by appellant steps to ensure that any control measures put in place are properly applied and ensure that any equipment is kept in working order, in good repair and in a clean condition. Equipment testing must be recorded with records retained for at least five years (regs 12, 13). Adequate and suitable protective clothing must be provided to employees who are likely to be exposed to asbestos. The clothing must be cleaned at suitable intervals (reg 14). Emergency procedures must be put in place and rehearsed to deal with an incident or emergency related to the use or removal of asbestos (reg 15). Every employer must prevent, where reasonably practicable, or reduce to the lowest practicable level where it is not, the spread of asbestos from the place in which the work is carried out (reg 16). Premises in which work involving asbestos is carried out must be kept in a clean state (reg 17). Areas in which work involving asbestos is carried out (unless the exposure is below the control limit or is sporadic and of low intensity) must be clearly designated as such and suitable notices/ signs erected. Only those employees required to undertake the work (who should be trained and competent) should be permitted to enter the designated areas. Steps must be taken to ensure that employees do not eat, drink or smoke in the designated area (regs 3(2), 18). If exposure is likely to exceed the control limit (currently set at 0.1 fibres per cubic centimetre of air averaged over a continuous period of four hours), employers must regularly monitor the exposure of their employees to asbestos by measuring the asbestos fibres in the air. The results of monitoring must be recorded. If the level is such that a health record is required (see reg 22, Appellant admitting liability Royal Court of Guernsey applying single discount rate in calculation of future loss Respondent appealing on basis award ought to be calculated on basis of higher discount rate employing two multipliers Court of Appeal of Guernsey allowing respondent s appeal Appellant appealing to Privy Council. below), the record must be retained for a minimum of 40 years. If it is below that level, the record must be retained for a minimum of five years (regs 2, 19). On the completion of demolition or major refurbishment works where asbestos has been present, an employer must obtain a site clearance certificate for reoccupation from a person accredited as competent to carry out the testing (reg 20). Employers must maintain a health record for all employees exposed to asbestos unless the exposure is below the control limit or is sporadic and of low intensity. Medical examinations by a relevant doctor (defined in reg 2) must be carried out at least every two years. Examinations must be paid for by the employer and carried out during working time. If a condition that is attributable to asbestos exposure is found then the employee must be provided with that information and the appropriate advice. Consideration must be given to assigning the employee to alternative work with no risk of further asbestos exposure (regs 3(2), 22). Adequate washing and changing facilities must be provided to any employee who is or is likely to be exposed to asbestos (reg 23). All raw asbestos and asbestos waste must be stored in a sealed receptacle clearly marked as to its contents (reg 24). Detailed labelling requirements are set out in Sch 2. There are various prohibitions on the importation, supply and use of asbestos contained in regs 25 31, breach of which are a criminal offence. Exceptions are set out in Sch 33 and a defence is provided by reg 37. Karen O Sullivan Professional support lawyer Lexis Nexis In November 1998, while he was riding his bicycle, the respondent was struck by a car driven by the appellant. He sustained very serious injuries including severe brain damage, partial loss of vision and loss of control of his right arm. His injuries meant that he would never be able to work again and that he would require specially adapted accommodation and 24-hour care for the rest of his life. Liability was admitted as soon as the respondent s claim for damages was notified to the insurers and the issues between the parties 6 Personal Injury Newsletter

7 Case digests accordingly related only to the quantum of damages. In August 2008, proceedings were issued as the parties could not agree as to the amount of the award. Among the issues that the court had to determine was the amount to be awarded for the losses that the respondent would incur in the future. They included his loss of earnings, but the most significant element was his claim for his future care and case management. In carrying out that exercise, account had to be taken of the fact that the money would be paid upfront for losses that would not arise until some date in the future. An adjustment would accordingly have to be made to the lump sum to account for that. The conventional approach was to assess the amount that was notionally required to be laid out in the purchase of an annuity which would provide the annual amount that was needed for the whole period of the loss. The recurring annual amount had first to be determined, to which a multiplier was then applied. The critical stage in determining the multiplier was to determine the interest rate which represented the return which could reasonably be expected on the lump sum, assuming that it was invested in such a way as to enable the whole amount of the loss to be met during the entire period by the expenditure of income together with capital. The higher the interest rate, the lower the number of years purchase would be required to calculate the capital value of the annuity. There was an assumption that the choice of interest rate would always take the form of a discount for the accelerated receipt of the lump sum (the discount rate). In January 2010, the Royal Court of Guernsey awarded, inter alia, damages to the respondent in the sum of 9,337, It concluded that, in calculating the respondent s future recurring losses, it would be appropriate to start with the discount rate set in 2001 by the Lord Chancellor of 2.5% (the Lord Chancellor s rate) and then adjust it for specific Guernsey factors. It accordingly applied a single discount rate of 1% in relation to the calculation of the respondent s future recurring losses (the judgment). The respondent took the view that the Lord Chancellor s rate was too low and that its adoption would result in his being undercompensated. In the absence of any Guernsey legislation establishing a discount rate for the island and any judicial decisions in that jurisdiction, the court should set an appropriate rate following the approach of the House of Lords in Wells v Wells [1998] 3 All ER 481 which had regard to the current rate of return on indexlinked government securities and ruled it should employ two multipliers: one for earnings-related losses and the other for costs that were not earnings related. In February 2010, the respondent filed a notice of appeal requesting that the judgment be set aside to the extent that it depended upon a discount rate of 1% and that it should be re-calculated based upon discount rates of -1.5% for earningsrelated losses and 0.5% for other losses (the appeal). The respondent developed its case by evidence from three witnesses who included B, an economist and D, an actuary. The appellant filed a crossappeal in which he contended that the judgment should be set aside and that a single discount rate of 2.5% ought to be substituted (the cross-appeal). In September 2010, the Court of Appeal of Guernsey allowed the appeal and dismissed the cross-appeal, substituting a discount rate of -1.5% for earnings-related losses and 0.5% for other losses. The appellant appealed. The issue for determination was whether the Court of Appeal had been correct to substitute the rates it had: (i) in relation to non-earnings-related losses; and (ii) earnings related losses. As to (ii), the questions that fell to be determined were: (a) whether it was acceptable in principle for there to be different discount rates for different heads of loss; (b) whether it was acceptable in principle to apply a discount rate which was not a discount rate at all, but an adjustment of the lump sum in the reverse direction; and (c) whether the jurats of the Royal Court had been entitled, on the evidence that was before them, to hold that an adjustment to the discount rate was not open to them in the absence of a suitable index and that the evidence before them was of too general a character to be acceptable. The appeal would be dismissed. (1) On the facts, the Court of Appeal had been correct to state that the court ought to have disregarded the Lord Chancellor s rate and that 0.5% had been the figure that the court ought to have arrived at for the non-earnings-related elements of the respondent s loss. (2) If the evidence showed that inflation would affect different heads of loss in different ways and that the differential was capable of being evaluated, the court should not close its mind to using different rates. To do that would risk giving the victim less than he was entitled to. Wells should not be seen as an indication that a single discount rate always had to be adopted. It would be wrong to do that if the evidence showed that, if that was to be done, a given head of loss would not be fully compensated. The victim of a tort was entitled to be fully compensated. Thompstone v Tameside and Glossop Acute Services NHS Trust [2008] 2 All ER 553 considered; D s Parent and Guardian v Greater Glasgow Health Board 2011 SLT 1137 considered. (3) The use of the word discount was not an apt way of describing the exercise. It was, in essence, simply a process of adjustment. In principle, there could be no objection to its operating in the reverse direction if the evidence showed that an adjustment which increased the multiplier was needed to ensure that the lump sum would continue to be large enough to meet losses to be incurred in the future. Otherwise, the effects of accelerated receipt, which were inevitable where the award was by means of a lump sum, would not be properly recognised. The victim should, so far as it was possible to do so, be fully compensated. (4) Whether the likely future gap between the growth of Guernsey average earnings and Guernsey inflation could be closed without the victim being overcompensated had to depend upon the extent and quality of the evidence. On the facts, the lump sum approach was being adopted which was bound to include matters which, by their very nature, could not have been ascertained precisely. B s analysis had been the best evidence that had been available and his conclusions and those of D had been largely unchallenged except on the ground that it had not been enough in view of the dramatic effect that their conclusions had on the result. Had D s evidence stood alone, there would have been some force in that objection. However, it was B s evidence that had been critical and that had been based on a thorough examination of information drawn from many countries over a long period. There had been no contrary evidence. The Court of Appeal had been right to intervene and to substitute for the single figure of 1% overall a rate of 0.5% for the future losses that were not earnings related and a rate of -1.5% for the earnings-related elements of the respondent s future losses, on the ground that those figures had been established by the evidence. Personal Injury Newsletter 7

8 Legislation Legislation update Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2012 National Health Service (Primary Medical Services) (Miscellaneous Amendments) Regulations 2012 Health and Social Care Act 2008 (Regulated Activities) (Amendment) Regulations 2012 Enactment citation SI 2012/918 Commencement date 1 April 2012 Legislation affected SI 2008/1963 amended Enabling power Child Maintenance and Other Payments Act 2008, ss 46(3), 53(1) Enactment citation SI 2012/970 Commencement date 30 April 2012 Legislation affected SI 2004/291, SI 2004/627 amended; SI 2004/627 revoked Enabling power National Health Service Act 2006, ss 85, 89, 94, 272(7)(8) Enactment citation SI 2012/Draft Commencement date 18 June 2012 in part; remainder 1 October 2012, 1 October 2013 Legislation affected SI 2010/781 amended Enabling power Health and Social Care Act 2008 ss 8(1), 20, 35, 161(3)(4) Amend the Mesothelioma Lump Sum Payments (Conditions and Amounts) Regulations 2008, SI 2008/1963. Provide for lump sum compensation payments to people suffering from mesothelioma, or to their dependants, who are not eligible for a payment under the Pneumoconiosis etc (Workers Compensation) Act The compensation payments are set according to the age of the sufferer and the extent of their disability. Increase the amounts of compensation paid to sufferers, or their dependants, under the 2008 scheme by 5.2% from 1 April Correct an error in the amount paid to dependants aged 67 and over. Where a claim is made by a sufferer the new rates will apply to those diagnosed with mesothelioma on or after 1 April Where a claim is made by a dependant the new rates will apply where the sufferer died on or after 1 April Amend the National Health Service (General Medical Services Contracts) Regulations 2004, SI 2004/291, and the National Health Service (Personal Medical Services Agreements) Regulations 2004, 2004/637 to: enable all contracts to specify an outer boundary area in addition to the practice area; ensure it is reasonable if a contractor refuses an application where a person lives in the outer boundary area; requires the terms of a GMS contract to be varied in a case where the contractor and primary care trust enter into arrangements made under the Patient Choice Scheme; and update references to the term vaccine and cross-references to the GMS Statement of Financial Entitlements to provide for a new procedure relating to applications for the closure of a contractor s list of patients. Amend the Health and Social Care Act 2008 (Regulated Activities) Regulations 2010 which prescribe the kinds of activities that are regulated activities for the purposes of registration in respect of the provision of health or social care. Allow service providers which are partnerships to meet the fi tness requirements collectively rather than individually. The defi nition of medical device is inserted into the Regulated Activities Regulations by reg 4 to ensure the use of the terms medical and dental is consistent. Ensures service providers have suitable arrangements in place where the service user lacks capacity to consent to care and treatment provided for them, and amends the defence of due diligence for an offence under the Regulated Activities Regulations. Require the secretary of sate to review the operation and effect of the Regulated Activities Regulations and publish a report. Amend Schs 1 and 2 to the Regulated Activities Regulations which respectively set out the activities that will be regulated activities for the purposes of the Health and Social Care Act 2008 and those which are exempt. 2 My Delivery Details *Required Fields *Title: *Name: *Surname: *Job Title: *Company: *Address 1: *Address 2: *Town: *Postcode: Telephone: SUBSCRIBE TO BUTTERWORTHS PERSONAL INJURY NEWSLETTER BY FILLING IN THIS FORM 1 YES! I would like a 12-month subscription to Butterworths Personal Injury Newsletter, please invoice me for Return Your Order Signature Date / / Marketing Department, LexisNexis, Freepost RSJB-BCTH-ZGUB, Quadrant House, the Quadrant, Sutton, SM2 5AS Fax +44 (0) newsales@lexisnexis.co.uk Privacy Policy We have a commitment to protect your privacy. We may use the information we collect from you to keep you informed of LexisNexis products and services. We do not sell, trade or rent your address to others, but we may pass your postal details to trusted third parties. If you do NOT wish to be kept informed by mail phone fax of other LexisNexis products and services, please tick the relevant box. If you do NOT wish your mailing details to be passed on to companies approved by LexisNexis, to keep you informed of their products and services, please tick the box. For further details of our privacy policy please visit our website at: Please quote response code AD Personal Injury Newsletter