QBE Technical Claims Brief June 2012

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Technical claims brief Monthly update – June 2012

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Techical claims brief

Transcript of QBE Technical Claims Brief June 2012

Page 1: QBE Technical Claims Brief June 2012

Technical claims briefMonthly update – June 2012

Page 2: QBE Technical Claims Brief June 2012

Contents

News 1Second Corporate Manslaughter prosecution Continues 1

UK Government pledges action against spurious whiplash claims 2

Victims seek damages from rapist’s Motor Insurers 3

Fraud 4QBE defeats low speed and phantom passenger claims: Nisa and others v Northwest Ambulance Service – Burnley County Court (2012) 4

Liability 5Employer may be vicariously liable for workplace murder: Vaickuviene and Others v J. Sainsbury PLC - Outer House Court of Session 2012 5

Golfer and Club liable for injuries: Anthony Phee v James Gordon and Others - Outer House Court of Session (2011) 6

Judge imposed unacceptably high standard on motorist: Robert Whiteford v Kubas Uab – Court of Appeal (2012) 7

Parent Company liable for subsidiary’s employee’s asbestosis: David Chandler v Cape Plc - Court of Appeal 2012 8

Use of booster seat was negligent: Emma Hughes v Estate of Williams deceased and Louise Hughes - High Court (2012) 9

Disclaimer 10

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Technical claims brief, monthly update – June 2012

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NewsSecond Corporate Manslaughter prosecution Continues Following a preliminary hearing on 2 August 2011 (see August 2011 Brief) the prosecution of Lion Steel Equipment Ltd under the Corporate Manslaughter and Homicide Act 2007 (CMHA) will go to a full hearing at Manchester Crown Court on 12 June 2012. The prosecution arises from the death of an employee who fell from the roof of the company’s headquarters in 2008.

In addition to the company being charged under the CMHA, three individual directors also face separate charges of Gross Negligence Manslaughter.

Comment: As with the first ever Corporate Manslaughter Prosecution of Cotswold Geotechnical Holdings, this case relates to a 2008 fatality and is taking a very long time to resolve. Critics of the 2007 Act have questioned its usefulness when the only two prosecutions brought to date are against relatively small companies in which, arguably, a “controlling mind” can be identified and individual prosecutions of directors are also possible.

The “controlling mind” test existed in common law before the 2007 Act but because of the difficulty in identifying a “controlling mind” in very large companies there were few prosecutions for the offence of common law corporate manslaughter. The Law Commission and Parliament thought this was unsatisfactory.

The statutory offence of corporate manslaughter introduced by the Act was intended in part to provide a means of holding large companies to account where there was a culture of poor health safety and it was impossible to identify the individuals responsible. It was anticipated by many commentators that the new test in the Act of gross breach of a duty by “senior management” would address this apparent deficiency in this area of criminal law.

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UK Government pledges action against spurious whiplash claims Government Ministers attending the second Insurance Summit at the Department of Transport offices on 2 May have pledged further support for the insurance industry in challenging dubious whiplash claims.

No concrete commitments were made but a number of ideas were floated including the formation of independent medical panels to assess alleged whiplash injury, giving doctors guidance on identifying genuine injuries and a consultation on extending the limit of the small claims track for personal injury claims from £1,000 to £5,000.

Justice Minister Jonathan Djanogly commented that there would be a “big bang” in the whiplash arena once the Legal Aid Sentencing and Punishment of Offenders Act 2012 (LASPO) came into force in April 2013.

Comment: The Government has said before that it expects LASPO to have a significant effect on the number of whiplash claims by reducing the amount of costs that solicitors can charge for these.

If the numbers do not reduce then further Government action appears likely.

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Victims seek damages from rapist’s Motor InsurersThe High Court is to rule on whether the insurers of serial rapist John Worboy’s taxi are liable under the Road Traffic Act 1998 (RTA) to pay damages to his victims.

Counsel for eight women who were drugged and then raped in Worboy’s cab, told the High Court that the taxi was not just the place where the attacks took place but that it had played an “essential” part in them. He argued that the injuries suffered by the women had been caused by or had arisen out of the use of a motor vehicle on the road. Liability for the injuries therefore

fell within the compulsory insurance requirements set out in the RTA.

The insurers Inceptum (formerly HSBC Insurance UK) expressed their sympathy for the women but disagreed with the interpretation of the RTA advanced by their counsel.

Judgment is awaited.

Comment: The courts historically have applied a wide interpretation to the phrase “caused by, or arising out of the use of motor vehicles”. Counsel for the claimants disputed that a ruling in his clients’ favour would have broad policy implications

because these claims were so unusual but insurers are concerned that any extension of the scope of the RTA will lead to more claims.

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FraudQBE defeats low speed and phantom passenger claims: Nisa and others v Northwest Ambulance Service – Burnley County Court (2012)The defendant’s ambulance rolled back into the claimants’ car due to the ambulance driver failing to secure the handbrake. Claims for personal injury were received from five people who were allegedly in the car at the time.

The accident occurred at such a low speed that QBE, the ambulance’s insurers, did not believe that the injuries

could have occurred as alleged. QBE also obtained evidence from the policyholder’s driver and paramedic that the car had only three occupants at the time of the accident not five.

QBE funded a robust defence of the claims with the result that all five were defeated. The trial judge found that three of the claimants were in the car but could not have been injured by the collision and that the other two claimants were not in the car at all. The first three claimants were ordered to pay the defendants costs on a standard basis and the latter two to pay the defendant’s costs on the more expensive indemnity basis.

Comment: Following a long campaign by QBE and other insurers, most judges are now receptive to the idea that genuine whiplash injury cannot occur at very low speeds. Judges are also more aware of false claims being made by alleged passengers who were not actually there.

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LiabilityEmployer may be vicariously liable for workplace murder: Vaickuviene and Others v J. Sainsbury PLC - Outer House Court of Session 2012 The Scottish Court of Session was asked to consider an application to dismiss a claim made by the family of a murdered man against J. Sainsbury plc who employed both him and his killer in one of their supermarkets. The family of the deceased argued that Sainsbury plc were vicariously liable for the actions of the murderer who had killed Mr Romasov after a campaign of racially motivated harassment. Prior to the murder, the deceased had made a formal written complaint about the harassment to his employers but they had failed to act.

The defenders had applied to have the case struck out on the basis that the pursuers were unable to show that there was a close connection between the wrongful acts of the murderer and his duties as an employee.

The pursuers disputed this saying that all the circumstances of the case were work- related. The harassment of the victim had taken place at the workplace, the victim and his killer had argued and fought at the workplace and the murder had taken place in the supermarket where both men worked. Even the kitchen knife used to kill Mr Romasov had been taken from the supermarket’s shelves.

The Judge, Lady Clark commented that this was a difficult issue to decide. The circumstances of the case were unusual and there was a lack of case law on harassment available for guidance. Having

considered the arguments of both parties, she held that the claim was not bound to fail and allowed it to proceed to a further hearing.

Comment: In her Judgment, Lady Clark agreed with earlier decisions (in England and Wales) that there were good policy reasons for extending the scope of vicarious liability to harassment cases. Employers should be encouraged to tackle workplace harassment.

Whatever the eventual outcome of this particular case, it seems that employers are being found vicariously liable in an increasingly wide range of circumstances.

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Golfer and Club liable for injuries: Anthony Phee v James Gordon and Others - Outer House Court of Session (2011) Whilst playing a round of golf, the pursuer (claimant) suffered serious injury when he was struck in the eye by a golf ball. He sought damages both from the golfer who struck the ball and from the club that ran the course.

The golfer was found to have been negligent. He should as an experienced golfer, have been aware that a bad shot might hit the pursuer and waited until he was out of range. The fact that he had

shouted “fore” by way of warning did not absolve him of responsibility for the injury. The club was also held liable for failing to conduct a formal risk assessment, provide warning signs or improve the course design.

An argument of contributory negligence was rejected. The pursuer was not an experienced golfer and could not be blamed for looking up when he heard the first defender shout “fore”.

The pursuer was awarded £400,000 in damages apportioned 70/30 between the golfer and the club.

Comment: This Scottish case will not be binding in other UK jurisdictions but will be persuasive. Sportsmen should take care not to injure passers-by and shouting a warning is no guarantee that liability will not attach.

Our thanks go to DLA Piper Scotland for telling us about this case.

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Judge imposed unacceptably high standard on motorist: Robert Whiteford v Kubas Uab – Court of Appeal (2012)The claimant was a motorcyclist who suffered serious injury when he collided with an on-coming lorry in a narrow country lane. The accident occurred on a bend in the road where visibility was restricted. Expert evidence supported the claimant’s allegation that the lorry was encroaching slightly onto his side of the road but the motorcyclist admitted that he was himself close to the centre of the road and could have avoided the collision had he been travelling further to his left.

The judge at first instance accepted that the lorry driver had caused the accident by driving over the centre line and found that he was primarily liable. There was 50% contributory negligence on the part of the motorcyclist.

The defendant appealed arguing that it was wrong of the judge to find that he had been negligent. The only way for him to avoid crossing the centre line would have been to drive only a few inches from the side of the road, which would have created its own risks. The claimant had admitted that he could have driven further to the left and thereby avoided the accident.

The Court of Appeal found that the lorry driver had acted as a reasonable and prudent driver by giving himself some room from the edge of the road. The court should not impose a counsel of perfection. The standard for motorists was one of reasonable care. On the facts, the defendant was not liable and the claim was dismissed.

Comment: It is unusual for the Court of Appeal to set aside the judgment of a first instance judge in favour of its own. The Court made it clear that it was not dealing with a dispute about findings of fact but considering whether liability had been correctly decided as a matter of law. In these circumstances, the Court was entitled to substitute its own judgment although it did so with caution.

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Parent Company liable for subsidiary’s employee’s asbestosis: David Chandler v Cape Plc - Court of Appeal 2012 The claimant was exposed to asbestos dust escaping from open-sided buildings whilst working for a brick-making company. Many years later, he was diagnosed with asbestosis but by this time his employers were no longer trading and there was no insurance covering his period of employment.

Having no prospect of obtaining damages from his former employers the claimant sued their parent company which was still trading (see June 2011 Brief) on the basis that they owed him a duty of care which they had breached. The High Court, applied the three-stage test set out in Caparo Industries Plc v Dickman (i.e. foreseability, proximity and whether it was fair, just and reasonable to find that a duty existed). They found that the parent company did owe the claimant a duty of care. The defendants appealed arguing that they did not have a duty in respect of the subsidiary company’s employees because they did not have complete control of that company and were not responsible for the implementation of health and safety there.

The Court of Appeal upheld the High Court’s judgment. The parent company Cape Plc had a significant degree of control over the subsidiary and had intervened in its operations previously. Cape had failed to use its superior knowledge about asbestos risks (stemming from its research into the link between asbestosis and exposure to asbestos dust) to advise on appropriate precautionary measures, which it could have enforced.

The lead judgment set out the criteria under which a parent company could be held to have a duty to the employees of a subsidiary.

• Thebusinessofthecompanieswasina relevant respect the same

• Theparentcompanyhadoroughttohave had superior knowledge of some relevant aspect of health and safety in that particular industry

• Thesubsidiary’ssystemofworkwasunsafe and the parent knew or should have known this

• Theparentcompanykneworshouldhave foreseen that the subsidiary or its employees would rely on the parent’s superior knowledge for the employees’ protection.

Comment: This is the first reported instance of a parent company being held to owe a duty of care to the employees of a subsidiary. This does not mean that every parent company will have such a duty and given the criteria set by the Court of Appeal, the number of companies affected is likely to be small.

The judgment will however have a significant effect on some companies and Cape see it as sufficiently important to seek permission for an appeal to the Supreme Court.

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Use of booster seat was negligent: Emma Hughes v Estate of Williams deceased and Louise Hughes - High Court (2012)The claimant was a three-year-old child at the time of the accident. Her mother had placed her on a booster seat rather than in the full child seat that was also fitted in her car because her daughter found the child seat uncomfortable.

The claimant’s, mother’s car was struck head on by another car, which had lost control resulting in the death of the driver and serious injuries to the claimant. The deceased driver’s insurers accepted liability on his behalf but sought a contribution of 25% from the claimant’s mother on the basis that she had failed to restrain her child in a suitable seat. The undisputed expert evidence was that the claimant would have suffered only minor

injuries had she been secured in the child seat.

The court held that the claimant’s mother had failed in her duty to take reasonable steps to secure her daughter in an appropriate seat. The manufacturer’s instructions for safe use printed on the seat were clear. The claimant just met the minimum weight recommended but was under the minimum age and height. The claimant’s decision not to use the child seat although well motivated could not be justified in the circumstances. The evidence was that had the more appropriate child seat been used, the injuries sustained would have been mostly avoided and a contribution of 25% was appropriate as per Froom v Butcher.

Comment: Where car seat manufacturers’ safety instructions are ignored without good reason, negligence is likely to be established.

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Completed 24 May 2012 – written by and copy judgments and/or source material for the above available from John Tutton (contact no: 01245 272 756, e-mail: [email protected]).

DisclaimerThis publication has been produced by QBE Insurance (Europe) Ltd (“QIEL”). QIEL is a company member of the QBE Insurance Group.

Readership of this publication does not create an insurer-client, or other business or legal relationship.

This publication provides information about the law to help you to understand and manage risk within your organisation. Legal information is not the same as legal advice. This publication does not purport to provide a definitive statement of the law and is not intended to replace, nor may it be relied upon as a substitute for, specific legal or other professional advice.

QIEL has acted in good faith to provide an accurate publication. However, QIEL and the QBE Group do not make any warranties or representations of any kind about the contents of this publication, the accuracy or timeliness of its contents, or the information or explanations given.

QIEL and the QBE Group do not have any duty to you, whether in contract, tort, under statute or otherwise with respect to or in connection with this publication or the information contained within it.

QIEL and the QBE Group have no obligation to update this report or any information contained within it.

To the fullest extent permitted by law, QIEL and the QBE Group disclaim any responsibility or liability for any loss or damage suffered or cost incurred by you or by any other person arising out of or in connection with you or any other person’s reliance on this publication or on the information contained within it and for any omissions or inaccuracies.

QBE Insurance (Europe) Limited and QBE Underwriting Limited are authorised and regulated by the Financial Services Authority. QBE Management Services (UK) Limited and QBE Underwriting Services (UK) Limited are both Appointed Representatives of QBE Insurance (Europe) Limited and QBE Underwriting Limited.

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