LEVEL 4 - UNIT 7 INTRODUCTORY CONSIDERATIONS FOR PERSONAL INJURY LAWYERS SUGGESTED ANSWERS - JANUARY 2015 Note to Candidates and Tutors: The purpose of the suggested answers is to provide students and tutors with guidance as to the key points students should have included in their answers to the January 2015 examinations. The suggested answers do not for all questions set out all the points which students may have included in their responses to the questions. Students will have received credit, where applicable, for other points not addressed by the suggested answers. Students and tutors should review the suggested answers in conjunction with the question papers and the Chief Examiners reports which provide feedback on student performance in the examination. Question 1 If she wishes to fund the case so that she does not have to pay our costs if she loses, then she has two options. The first is a Conditional Fee Agreement (CFA), where the solicitor will normally expect to receive an uplift (up to a maximum of 100%) on base costs to reflect his success. This is also known as a no win no fee agreement. The enhancement on the fee is a percentage increase on the solicitor s normal fee and not a percentage of damages. This is paid by the client and not the defendant. The percentage increase on the solicitor s fee is agreed in writing between the client and the solicitor prior to the litigation. The Conditional Fee Agreements Order 2013 imposes a cap on the recoverable success fee (including Value Added Tax VAT ) in personal injury and clinical negligence claims of 25% of general damages and past losses. This means that the success fee cannot be taken from damages for future losses, such as future care costs. The other option is a Damages Based Agreement (DBA) which is governed by the Damages-Based Agreements Regulations 2013. Under a DBA, lawyers are not paid if a case is lost, but may take a percentage of the damages recovered for their client as their fee if the case is successful. The percentage of the amount the lawyer can claim (including VAT) must not exceed 25% of the damages awarded. As with a CFA, this cannot be taken from damages for future losses, such as future care costs. As stated in 1 above, the enforceability of a DBA is governed by the Damages-Based Agreements Regulations 2013. To be enforceable the DBA must be in writing. It must also specify the claim to which the agreement relates; the circumstances in which the costs are payable; and the reason for setting the amount of the payment at the level agreed. The percentage of the amount the lawyer can claim (including VAT) must not exceed 25% of the damages awarded. Page 1 of 5
(d) Mrs Blakemore owes the solicitor 165,000 x 20% ie 33,000. If the costs recoverable from the defendant are assessed at 28,000, then Mrs Blakemore has to pay her solicitor the excess of 33,000-28,000 = 5,000 out of her damages i.e., she receives 160,000 of the damages. She should bring a claim against the insurer. Regulation 3 of the European Communities (Rights against Insurers) Regulations 2002 provides that an insurer shall be directly liable to an entitled party (i.e. any resident of a member state) if the entitled party has a cause of action arising out of an accident, and has a cause of action against an insured person in tort. Question 2 Legal Expenses Insurance (LEI) is also known as Before the Event Insurance (BTE). It can be taken out by those wishing to protect themselves against potential litigation costs. It is generally paid on an annual basis to an insurance company. It may be attached to many forms of insurance such as car, contents or house insurance by insurers without the policy holder being aware of it. Where the client has the benefit of a BTE insurance policy, the presumption is that they will use it. There is no need to enter into a DBA because BTE insurance generally covers both sides costs. The level and type of cover available under the BTE policy should be checked to make sure it is suitable. Many BTE policies have a limit of indemnity of 25,000, which may not be sufficient to cover the larger cases such as this one. If the cover is insufficient then it may well be reasonable to enter into a DBA. In Sarwar v Alam (2001), the claimant had taken out an After the Event Insurance (AEI) policy when there was the opportunity to benefit from an existing legal expenses insurance policy or BTE insurance. In the ordinary course of events, a claimant making a straightforward modest Road Traffic Accident (RTA) claim will be expected to use the BTE policy. It would be reasonable not to use the LEI if the level and type of cover available under the policy is not suitable. The Court in Sarwar v Alam (2001) emphasised that the decision related to small RTA claims with a quantum of 5,000 or less and that enquiries should be proportionate. Question 3 The Limitation Act LA 1980 defines Personal Injury as an impairment of a person s physical or mental condition. Applying that definition to Mrs Blakemore s injuries set out in the medical report, they are all covered, as most of them are physical and the panic attacks are a mental condition. The LA 1980 definition is also used in CPR 2.3. Mrs Blakemore s injuries and symptoms as set out in the medical report in order of longevity are as follows :- 1. Bruising/soft tissue injury to her forehead (Lasted 6 weeks and now symptomless). 2. Flashbacks and panic attacks expected to reduce over the next 6 months. Page 2 of 5
3. Severe whiplash to her neck and back expected to reduce over the next 18 months. However she feels it may be getting worse. 4. Post traumatic arthritis is a permanent disability. (d) Mrs Blakemore has suffered soft tissue injuries to her cervical and lumbar spine, commonly known as a whiplash injury. The cervical spine is the neck, and the lumbar spine is the lower back. This type of injury is caused when the head is thrown forward in a sudden forceful jerk and is commonly associated with RTA s. The cause of the injuries associated with whiplash is the stretching and straining of the soft tissues, (the tendons, ligaments and muscles supporting the cervical spine or neck). Symptoms can be of widely varying severity. Typically, symptoms will not be present immediately after the accident but will develop over one or two days. Most people make a full recovery within days or weeks, but where symptoms are severe, it may take months or even years for them to subside. Under s.11 and s.12 of the LA 1980, where a claimant claims damages for negligence, and that claim includes a claim for personal injuries, the claimant must normally commence the claim (i.e. the claim form must be issued, or received by the court in order to be issued) within three years from the date on which the cause of action accrued; or the date of knowledge (if later) of the person injured. Section 14 (2) of the LA 1980 defines date of knowledge as the date the claimant was aware that the injury was attributable to breach of duty; and s.14(1) aware as to the identity of the defendant. As Mrs Blakemore would have been aware that she was injured, and of the identity of the defendant at the time of the accident, date of knowledge is not relevant to this case. Mrs Blakemore should have issued proceedings on or before 23 December 2014. Where the three-year period has expired, the claimant is not prohibited from commencing proceedings, although if they do so, the defendant may seek to have the claim struck out on the grounds that it is statute barred. However, the claimant may apply to the court for the limitation to be disapplied under s.33 of the LA 1980. On the facts the previous solicitors gave wrong advice, she could bring a claim against them if this claim is struck out. (e) Section 33 of the LA 1980 gives the court a wide and unfettered discretion to disapply the three-year limitation period if it appears to the court that it would be equitable to allow an action to proceed. The court will look at a number of factors including: the length and reasons for the delay. In this case limitation expired on 23 December 2014 and so there had been very limited delay since the expiry of the limitation period. There is good reason for the delay as Mrs Blakemore was advised against making a claim by previous solicitors and she was entitled to rely on that professional advice. the effect of any delay on the cogency of the evidence (medical evidence is still available, only likely to be claimant and defendant as witnesses, unlikely that their recollection will be affected by the delay); the conduct of the defendant following the date of the cause of action (not applicable on the facts of the case); the duration of any disability (within the meaning of the Mental Capacity Act 2005) suffered by the claimant after the cause of action arose (not applicable on the facts of the case); Page 3 of 5
the conduct of the claimant after he became aware that he might have a claim against the defendant (only a few weeks since limitation expired and she has acted quickly and we will also act quickly); the steps taken by the claimant to obtain medical, legal or other expert advice, and the nature of any advice received (none taken but see reasons for delay). prejudice to the parties on the facts there is no prejudice as all the evidence is still available. She must issue proceedings at once and if necessary apply for limitation to be disapplied. Question 4 Employers are responsible for the health and safety of their employees while they are at work. This is governed by Employers Liability (Compulsory Insurance) Act 1969. Employers liability insurance is compulsory. This differs from public liability insurance, which is voluntary and covers an employer for claims made by members of the public or other businesses. Employers must have liability insurance against liability for bodily injury and disease, and can be fined if they do not hold a current employers' liability insurance policy. The Employers Liability Tracing Office (ELTO) is an independent body set up to provide claimants and their representatives with quick and easy access to a database of employers liability policies through an online enquiry facility, helping them to find their employer s employers liability insurer. In this case any employers liability policy should be found as the company is still trading. The Third Parties (Rights against Insurers Act) 1930 ensures that where the insured (Offisort Limited) incurs liability to a third party (Mr Janicki) but is declared insolvent, (the insurance proceeds will be protected from the insured's insolvency). Under the 1930 Act procedure, the insured's rights are automatically transferred to the third party upon the occurrence of specified insolvency events. Once transferred the third party can sue the insurer directly. The 1930 Act requires Mr Janicki to first issue proceedings to establish the existence and amount of the insured's liability before he can issue proceedings against the insurer itself (i.e. an admission from the defendant or judgment obtained). Post Office v Norwich Union Fire Insurance Society Ltd (1967). Liability under an indemnity policy does not accrue unless and until the existence and amount of the liability to relevant third parties has first been established. Third Parties (Rights against Insurers) Act 2010 (when in force) will allow the third party to issue proceedings directly against the insurer and resolves all issues (including the insured's liability) within those proceedings. Page 4 of 5
Question 5 Mr Janicki has suffered personal injury and is the claimant. He alleges that his injuries were caused by his employer, Offisort Limited, in the course of his employment, and it will be the defendant. Offisort Limited is insured and its insurers will be responsible for paying any damages and costs if the case is successful. There is a preliminary report from the Health & Safety Executive who is responsible for investigating workplace accidents and bringing criminal prosecutions if necessary. Mrs Agatha St. Jean is a witness for the claimant as her evidence supports the claimant. Gillian Keatings is a witness, although at this stage no statement has been obtained from her. Her evidence is likely to be helpful to the claimant. The other cleaner who called the ambulance is also a witness, although at this stage, no statement has been obtained. (i) Based on the proof of evidence of Mr Janicki, he has sustained the following types of burns:- 1 st degree burns Back of both hands described by him as a burn to the outer layer of skin on the back of both hands, burned but not all the way through. 2 nd degree burn Right tibia (Front of lower leg). Described by him as the first layer of skin was burned through and the second layer of skin (dermis) was also burned. 3 rd degree burn Right upper forearm. Described by him as a full thickness burn involving all the layers of skin. (ii) Mr Janinki has sustained the following orthopaedic injuries: Comminuted fracture at least three separate pieces of bone must be present (three breaks) for a fracture to be classified as such. Mid shaft of right humerus humerus is the long upper arm bone and a mid-shaft fracture means it is fractured half way up (or down). Hairline fracture of patella Fracture without separation of right knee cap. Page 5 of 5