News Category 3
Rad Hamed: Club Breached its Duty - Diane Rostron, Linder Myers Solicitors
08/04/15. Diane Rostron, medical negligence partner at Linder Myers Solicitors, talks about her recent case against Tottenham Hotspur and a Harley Street cardiologist On the 1st August 2006 Radwan Hamed, then aged 17, signed on professional terms with Tottenham Hotspur Football Club. He was a gifted and dedicated footballer who had been associated with the Club since the age of 11. It was hoped, and by many, expected, that he would become a successful professional footballer. However, just nine days later, whilst playing for the Club’s youth team in Belgium, he suffered a cardiac arrest which resulted in catastrophic brain damage.
Radwan, in legal action commenced in the High Court through his father and Litigation Friend, claimed that the cardiac arrest, and consequent brain damage, resulted from the negligence of Dr Peter Mills (the cardiologist who screened him) and his employer Tottenham Hotspur. Dr Charlotte Cowie and Dr Mark Curtin were the specialist in-house sports physicians employed by Spurs at the time.
It has long been recognised in the world of athletics and football that young athletes may suffer from cardiac abnormalities which, if they remain undetected and the athlete is permitted to continue to play, place that athlete at risk of sudden cardiac death...
Image cc flickr.com/photos/manc72/8036430613/
Director’s Liability for Lack of Employer’s Liability Insurance - Douglas McGregor, Brodies LLP
07/04/15. The decision by the Inner House of the Court of Session to allow the defender’s appeal in Campbell v Peter Gordon Joiners Ltd & Anr [2015] CSIH 11 has opened up the possibility that the Supreme Court will now be asked to consider the rule laid down in Richardson v Pitt-Stanley [1995] QB 123. The Court of Appeal in England decided in that case that a director cannot be found personally liable to meet an award of damages where a company has failed to fulfil its statutory obligation to put in place employer’s liability insurance cover.
Mr Campbell claimed for an injury caused by a circular saw while employed by the first defender. The insurance which had been taken out by his employer excluded injuries caused by electrically powered woodworking machinery. He sued his employer but they were insolvent so he also included the sole director of the company as a defender. No evidence has been heard by the court as yet. Instead, the focus has been on the relevance of Mr Campbell’s case against the director.
At first instance Lord Glennie (Campbell v Peter Gordon Joiners Ltd [2013] CSOH 181) held that civil liability could in principle attach to an individual director for a breach of the Employers’ Liability (Compulsory Insurance) Act 1969 and allowed the case through to proof. In doing so he explicitly declined to follow the approach taken in Richardson v Pitt-Stanley.
By a 2:1 majority the Inner House allowed the director’s appeal and dismissed the action against him. Lord Brodie and Lord Malcolm gave separate Opinions allowing the appeal. Lord Drummond Young delivered a strong dissenting judgment but found himself in the minority. It is understood that the decision is now to be appealed to the Supreme Court.
Civil liability: the general rule and the exception
All the judges in the Inner House were agreed that the general rule is that where an Act creates an obligation and enforces its performance in a specified manner, it may generally be taken that performance cannot be enforced in any other manner. So an Act enforced by criminal sanction will not normally give rise to civil liability. However, all the judges also accepted that the 1969 Act was enacted for the benefit of a particular group of people – the employees. That meant the Act was capable of falling within an exception to that general rule which may entitle members of that particular group to sue for a breach of the statute. It’s important to note that this is a significant departure from the position adopted in Richardson v Pitt-Stanley where it was decided that the duty to insure was for the benefit of both employers and employees and so the exception could not apply.
The majority view in the Inner House
The leading judgment was given by Lord Brodie who largely followed the approach of the English Court of Appeal. His view was that any civil right to claim for breach of the 1969 Act would be a right against the employer company and not against a director of the company because the duty to insure in s.1(1) is imposed on the company. But in his view a right against an insolvent and uninsured company would be “a palpably redundant worthless and perhaps illusory sort of right” and since such a right would be “useless” it must be assumed that Parliament didn’t intend to create it.
If the Act does not create a right against the company then there can be no right against a director. In any event, the wording of the Act does not impose a duty directly on directors – it merely allows them to be “deemed” guilty of an offence committed by the company if there has been consent, connivance or neglect on their part.
In addition, the law is slow to recognise a right to claim for pure economic loss and the Act cannot be interpreted as creating a right in an employee to sue a director for the value of an unsatisfied award of damages. Incorporation is intended to limit financial liability and company officers are not guarantors of the company’s insolvency. If there is no insurance and the company is insolvent then there will be no remedy for the employee.
Lord Brodie makes it very clear that he does not consider it appropriate that a director should have to shoulder the risks or “act as an insurer” for employees. He sees no reason to think directors will have deeper pockets than an insured employee; directors may struggle to get insurance and may become personally liable for what may be a “trivial oversight”.
Lord Malcolm agreed that it was unlikely that Parliament had intended to impose civil liability on directors and the fact that it would involve “piercing the corporate veil” weighed against the existence of such liability. The duty to put insurance in place fell on employers alone and not on the directors.
The minority view in the Inner House
Lord Drummond Young’s approach contrasts starkly with the views of the majority. He saw the issue as being relatively straightforward.
“The question that has arisen in the present case is whether sections 1 and 5 of the 1969 Act impose civil liability upon any director who has consented to a corporation’s failure to insure in accordance with section 1, or who has connived in or facilitated any such failure to insure. In my opinion those sections do impose such liability.”
He considered that the Act creates a right against the employer and will also create a direct right against a director in appropriate circumstances. The focus should be on the purpose of the Act which is to ensure that funds are available to compensate workers who are injured. That underlying purpose supports the idea that a director who is complicit in breach of the statute should be liable as well as the company.
Although the Act places the primary duty to insure on the company that is because it is the company that must take out insurance in its name. But, since a company can only act through its officers who have a duty to ensure so far as possible that the company fulfils its statutory duties, s.1(1) by itself must impose a duty on the directors.
Directors who personally commit a delict in the course of their duties may be found personally liable. Failure to maintain insurance is a wrongful act giving rise to civil liability and consent, connivance or neglect on the part of a director are therefore sufficient to render the director personally liable.
Lord Drummond Young goes on to confirm that he does not consider that his view results in any unfairness. If a director has ignored or deliberately disregarded the company’s statutory duty then there is nothing unfair about him being found liable for that failure. The wording of the Act makes it clear that a director will only be liable if he is implicated in the failure to obtain insurance.
We will now have to wait and see what the Supreme Court makes of it. With both the Court of Appeal in England and the Inner House in Scotland having reached similar conclusions as to civil liability for breach of the 1969 Act the law in this area may be regarded by some as being settled. However, both were majority decisions with significant dissenting judgments and the results seem to have turned to a considerable degree on policy considerations. If, as anticipated, the Supreme Court is given the opportunity of considering the issues it will be fascinating to see which approach finally wins out.
Douglas McGregor
Brodies LLP
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Future Developments in RTA Claims, Reducing Fraud and Costs - Andrew Mckie, Clerksroom
06/04/15. The landscape for RTA PI claims has changed dramatically since 2010. We have been through the portal changes and fixed costs changes but the MOJ is not prepared to leave matters there. The industry has become fixated on ‘reducing fraud’ in whiplash claims and some insurance organisations are convinced that Britons have the weakest necks in Europe.
This Chapter therefore seeks to examine the recent and upcoming changes in whiplash related claims that makes further attempts to reduce fraud and cut costs in relation to whiplash claims.
Fundamental Dishonesty
The government working paper on what is now the Criminal Justice and Courts Bill 2015...
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Image ©iStockphoto.com/PeskyMonkey
Low Cost Arbitration Instead of Expensive Civil Justice? - Matthew Chapman, 1 Chancery Lane
03/04/15. At a recent seminar a solicitor, with whom I was discussing the recent (rather extraordinary) hike in Court fees, mentioned an initiative which Andrew Ritchie QC has pioneered. Arising out of concerns about recent Government “reforms” to civil justice as these deal with personal injury litigation, the initiative is a proposal for personal injury and clinical negligence claims (presently dealt with in the civil justice system that we all know and love) to be dealt with instead by means of an alternative: a low cost and relatively swift arbitration scheme (using independent PI silks as arbitrators). In common with commercial arbitration, upon appointment, the PI Arbitrator will provide the parties with relatively early assessment of and decision upon those matters which they cannot agree between themselves. The scheme advertises itself as offering no Mitchell-strike outs and no Jackson-inspired costs rules (and, of course, with competitive entry fees). Defendants can still recover costs (albeit capped at 20% of damages). In essence, what is proposed is a private (privatised?) system of (informal) redress which will run parallel to (and, perhaps, eventually replace) the present civil justice system for PI claims.
The web page for the new arbitration system (advertised as launching next month) is at www.picarbs.co.uk.
Who knows, if the proposal takes off, the Royal Courts of Justice building on the Strand can become a full-time (rather than merely part-time) gymnasium and corporate entertainment venue…
Matthew Chapman
1 Chancery Lane
Image ©iStockphoto.com/webphotographeer
Stevens v Equity Syndicate Management Ltd; Is the “Hammer Blow” to the Credit Hire Companies the End of the Matter? - Georgina Crawford, Farrar’s Building
01/04/15. This significant appellate decision handed down at the end of February impacts upon the main arguments going to the issue of “rate” in credit hire claims which are routinely heard in the county courts. The last time the Court of Appeal was tasked with dealing with a rates issue was in Darren Bent v Highways and Utilities Construction (No. 2) [2011] EWCA Civ 1384 and therefore this area has remained relatively untouched at appellate level for some time. The decision is unequivocally advantageous to Defendants, or more pertinently, their insurers, hence the “hammer blow” description proffered by one counsel in the case.
Facts
2. Karl Stevens’ Audi A4 was involved in a collision with a vehicle driven by the Defendant’s insured on 10 February 2011. Liability was not in issue and the matter proceeded on quantum alone. The Claimant had entered into an agreement with Accident Exchange Limited whereby he hired a replacement vehicle for a period of 28 days, at a daily rate of £140, plus an additional daily excess waiver charge which brought the £1,500 excess to zero, and windscreen damage cover. The total daily charge was £162.50 plus VAT and the overall cost was £5,764.80.
The first instance decision
3. Unusually for the value of the claim the first instance trial was heard by a Recorder. The only rates evidence before the court consisted of a report produced by Accident Exchange setting out rates varying from £33.83 per day (net of VAT) with a £500 excess, to £136.76 per day (net of VAT) with a £1,000 excess. Recorder Tolson QC found that the applicable rate was the average of four made available by National, Europcar, Thrifty and Alamo which varied from £60 to £66 per day (net of VAT) with a zero excess; he awarded a daily rate of £63.16.
The first appeal
4. The first appeal was heard by Burnett J (now LJ). It was accepted that the first instance judge had erred in awarding an average of four rates, which is the Scottish approach. Post Bent, of course, this is no longer good practice. At paragraph 29 of his judgment, Burnett J set out his rationale;
“… the search must be for the figure which the claimant was willing to pay [to use Lord Hoffmann's formulation] on the basis that he had in fact gone into the ordinary car hire market to find a temporary replacement for his vehicle. In doing that the evidence of a claimant that he would be disinclined to spend more than necessary on a car would be relevant. There might be evidence of how the claimant has sourced hire cars in different contexts. Some might be fortunate to have access to discounted rates through membership of motoring or professional bodies. As was recognised in Burdis a claimant hiring a vehicle to replace one damaged by a tortfeasor would be under a duty to take reasonable steps to mitigate his loss. That does not mean that a claimant would be expected to telephone every last car hire provider in the locality to seek details of various deals that might be available. But the reality today is that almost anybody seeking to hire a vehicle in any particular locality would be likely to investigate the market by doing a simple comparative search on the internet. The full panoply of different hire rates available to the credit hire industry through specialist websites (and regularly produced in credit hire litigation) would not be available to an ordinary driver, but one way or another it is not difficult for anyone wishing to hire a car to discover the rates offered by the major hire companies. Cheapest is not necessarily best and for all sorts of reasons anyone may reasonably choose to hire from a company that is not the cheapest available.”
5. Accident Exchange sought to argue that at first instance it had presented evidence of basic hire rates equivalent to its own thereby demonstrating that there were no additional irrecoverable benefits associated with the rate it charged. However in a straightforward approach, Burnett J reminded himself of Lord Hoffmann’s judgment in Dimond v Lovell [2002] 1 AC 384 and in particular the focus on the difference between the charges incurred when hiring on credit, and the charges the ordinary Claimant would be prepared to pay had he hired from the local mainstream market.
6. In this particular instance, Burnett J held that Karl Stevens would have wanted to hire on a zero excess basis, at as cheap a rate as possible (it is perhaps difficult to countenance a scenario where a claimant would want to do otherwise). With that in mind, it followed that the appropriate rate was slightly lower than the average which had in fact been applied, and therefore the appeal failed.
The second appeal
7. This was heard by Jackson LJ, Kitchin LJ and Floyd LJ, with the unanimous judgment delivered by Kitchin LJ. Accident Exchange raised the following points on appeal;
i. The subjective approach adopted by Burnett J was wrong and ran contrary to Pattini v First Leicester Buses Ltd [2011] EWCA Civ 1384, in which an objective approach had been applied.
ii. There was too much focus on Lord Hoffman’s reasoning in Dimond, and not enough attention paid to the supervening decision of Bent (and indeed Burdis v Livsey [2002] EWCA Civ 510)
iii. In circumstances where some of the basic hire rates put in evidence by the Claimant were higher than the credit hire rate actually incurred, Burnett J had been wrong to conclude that the credit hire rate included irrecoverable additional benefits.
8. The Court of Appeal held that Burnett J had erred in his decision, on the basis that he had applied a subjective rather than an objective approach. The decision therefore represents a distinct emphasis upon an objective approach, in a move away from the subjective approach which has routinely been adopted in cross examination and submissions. However the appeal was dismissed on the basis that if the correct approach had in fact been adopted, a lower figure would have been awarded.
9. In a resounding success for the insurance industry it was held that it would be ‘manifestly unjust’ to look at only the highest rate within the range of basic hire rates presented in evidence, and proceed to award the credit hire rate if it was lower than the highest basic hire rate. The court went further; the correct approach was to identify the lowest reasonable rate charged by a mainstream supplier operating in the Claimant’s locality.
10. Paragraphs 34 to 36 are key: [34] … I do not understand Lord Hoffman to have been saying that it was necessary to consider what Mrs Dimond would herself have been prepared to pay. The attitude of the driver who is not at fault must be irrelevant to the analysis. For example, it may be that, as in the present case, the person would never have hired at all. The analysis it, as Aikens LJ said in Pattni, an objective one and it is to determine what the BHR would have been for a reasonable person in the position of the claimant to hire a car of the kind actually hired on credit.
[35] Here I think one finds the answer to the questions I have posed. The rates quoted by companies for the basic hire of a vehicle of the kind actually hired by the claimant on credit hire terms may vary. No doubt some are offered on very favourable terms. So also those at the top of the range may reflect particular market conditions which allow some companies to charge more than others. But it seems to me reasonable to suppose that the lowest reasonable rate quoted by a mainstream supplier for the hire of such a vehicle to a person such as the claimant is a reasonable approximation to the BHR. This is likely to be a fair market rate for the basic hire of a vehicle of that kind without any of the additional services provided to the claimant under the terms of the credit hire agreement.
[36] It follows that a judge faced with a range of hire rates should try to identify the rate or rates for the hire, in the claimant’s geographical area, of the type of car actually hired by the claimant on credit hire terms. If that exercise yields a single rate then that rate is likely to be a reasonable approximation for the BHR. If, on the other hand, it yields a range of rates then a reasonable estimate of the BHR may be obtained by identifying the lowest reasonable rate quoted by a mainstream supplier or, if there is no mainstream supplier, by a local reputable supplier
11. Taken with the Bent decision, the correct approach is now threefold; first the court must look to rates available within the Claimant’s locality, second it must address the question of what comparable vehicles were actually available to the Claimant, and third it must then identify the lowest reasonable rate for such a vehicle. If the local search revealed one single rate, then that rate was likely to be a reasonable indication of the basic hire rate. If it revealed a variety of rates, the lowest reasonable rate provided by a mainstream supplier or, in the absence of a mainstream supplier, by a local reputable supplier, was likely to be the best indication of the basic hire rate.
12. More so than ever, therefore, it will be important for Defendants to put in evidence a comprehensive report with the appropriate range of available vehicles and rates, focused as specifically as possible upon the location of and availability to the particular Claimant. It is difficult to see how, where such evidence “beats” the credit hire rate, the Defendant will fail to discharge the burden of proof.
13. However, this may not be the end of the matter. Accident Exchange applied unsuccessfully for leave to appeal to the Supreme Court on the slightly surprising basis that a claimant who hires on credit ought to be entitled to the additional benefits which are provided within the rate charged. Given that this is ground which has been thoroughly covered in authorities which are now over ten years old and widely considered as trite law, it will be interesting to see whether Accident Exchange renew their application for leave to appeal. There is perhaps more mileage in their alternative argument that according to the Stevens rationale, the situation will arise where recoverable rates are lower than those agreed under the ABI GTA. A renewed application for leave to appeal is surely inevitable. In the meantime, we can perhaps at least take comfort in the simplicity of the approach in Stevens, which at things stand, is good law.
Georgina Crawford
Farrar’s Building
Image ©iStockphoto.com/BartCo
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