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7/28/2019 QBE Technical Claims Brief August 2011
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News
Insurers to financeAnti Insurance FraudPolice Unit and Register
The General Insurance Council has
committed to funding a dedicated police
insurance fraud investigation unit and an
insurance fraud register.
The police unit is due to become
operational on 1 January 2012. It will
investigate insurance fraud cases reported
by insurers, regional police forces and
the Insurance Fraud Bureau. It will have
35 full-time police officers and other
specialist support staff led by a Detective
Chief Inspector. It will also have access
to specialist police resources such as
surveillance and forensic teams. The
unit will be based at the City of LondonPolice headquarters but will operate
throughout England and Wales with
facilities to investigate cases in Northern
Ireland and Scotland.
The Insurance Fraud Register is a
database owned by the insurance
industry, which will pool details of all
known insurance fraudsters. It is due
to become operational in early 2012.
Comment: the Governments Transport
Select Committee called on insurers back
in March o this year to do more to tackle
insurance raud generally and specifcally
to und a specialist anti-insurance raud
police unit (see April 2011 Brie). The
industry has responded positively and
can only hope that the judiciary will act
in a similarly positive vein to insure that
raudsters caught by the new police unit
are punished appropriately.
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Second-ever UK CorporateManslaughter chargebrought by CrownProsecution Service
The Crown Prosecution Service (CPS)
has announced that Lion Steel Equipment
Ltd will become the second company
to be prosecuted under the Corporate
Manslaughter and Homicide Act 2007
(CMHA). The charge arises from the
death of an employee who fell through
the roof of the companys headquarters
building in 2008.
Three of the companys directors will
also be charged with gross negligence
manslaughter under the CMHA. The first
hearing is scheduled for 2 August 2011 at
Tameside Magistrates Court.
Comment: the only other company tobe prosecuted under the CMHA to
date was a small company, which
could not aord to pay the level o fne
set out in the sentencing guidelines.
Cotswold Geotechnical Holdings were
fned 385k as opposed to the 500,000
to several million pounds fnes set out in
the guidelines.
The case will hopeully give some
guidance as to the level o fnes a
larger company is likely to ace.
UK businesses foreseetough times ahead
QBEs sixth national survey of UK
businesses paints a rather gloomy
picture of fragile economic recovery.
The survey of 400 UK businesses of
all sizes reveals that 72% of businesses
expect a full economic recovery to take
two or more years and that 43% will
find it difficult to continue trading if
current economic conditions continue
for another 12 months. Inflationary
pressures are hampering recovery with
57% citing the negative impact of rising
commodity prices.
On a more positive note 60% of
businesses say that they are now
operating more efficiently and 42%
have benefitted from the demise of
competitors suggesting that
businesses that can survive the
recession may prosper in future.
Comment: Terry Whittaker QBEs
Managing Director Distribution has
warned businesses against cutting
corners on insurance cover and thatopting or the cheapest quote ahead
o quality o service and fnancial
strength o the provider could prove
to be a alse economy.
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Part 36 Costs consequencesapply despite exaggerationof claim: Trevor Fox vFoundation Piling Ltd - Courtof Appeal (2011)
The claimant injured his lumbar spine after
falling at work. Liability was admitted by
his employers. The claimant alleged that
he had suffered serious injury and served a
schedule claiming financial loss in excess
of 280,000 plus general damages.
The defendant however had obtained
surveillance evidence showing that the
claimant was not as seriously injured as he
alleged. The defendant had also obtained
medical evidence saying that any genuine
symptoms were due to the acceleration of
a pre-existing condition.
The defendant made a Part 36 offer of
63,000 of which the claimant wouldreceive 23,550 net of recoverable
Compensation Recovery Unit (CRU)
benefits. The claimant rejected this offer
and made a counter offer of 150,000
worth 110,551 to the claimant net of
CRU benefits.
Following the receipt of a joint medical
report confirming that the claimant was
suffering a one or two-year acceleration
of a pre-existing condition, he revised
his claim down to 59,451 plus general
damages. In response, the defendant
made a new Part 36 offer of 37,500
worth 31,702 to the claimant. The total
offer figure was less but the claimant
would actually receive more as the
amount of repayable CRU benefits to be
refunded had reduced because of the
shorter period of incapacity caused by
the accident. Settlement was agreed with
costs to be determined by the court.
The judge at first instance ordered
the claimant to pay the costs of the
defendant from the date of expiry of the
first Part 36 offer on the basis that the
defendant was the successful party and
that his conduct in exaggerating his claim
justified a costs order against him. The
claimant appealed.
The Court of Appeal held on the
first issue that Part 36.10 of the Civil
Procedure Rules (CPR) was clear that
when assessing whether a claimant
had beaten a Part 36 offer it was the
net amount that the claimant received
after CRU benefits were refunded that
counted, not the value of the gross offer.
On this basis, the claimant had clearly
done better on the second offer than
the first and the defendant was not the
successful party.
On the second issue, the claimant had
recovered much less, than he originally
claimed but the trial judge had not found
him guilty of any misrepresentation and it
was not for the Court of Appeal to make
this finding. The claimants conduct did
not therefore justify the costs order
against him.
The defendant had medical and
surveillance evidence at an early stage
and should have protected their position
by making a realistic Part 36 offer at an
early stage. The courts had gone too far
in moving away from a strict interpretation
of Part 36 and this had led to uncertainty
and expensive satellite litigation. The
claimants appeal was allowed.
In the context o personal Injury
litigation where the claimant
has a strong case on liability
but quantum is inlated, the
deendants remedy is to make
a modest Part 36 oer. I the
deendant ails to make a suicient
Part 36 oer at the irst opportunity,
it cannot expect to secure costs
protection. Dierent considerations
may arise in cases where the
claimant is proved to be dishonest,
but (on the judges indings) that is
not the case.
Lord Justice Jackson
Comment: The Court o Appeal did
not agree with a trial judge penalising
exaggeration in this case but did approve
it in the Abbot V Long case above. There
were no Part 36 oers in Abbott and this
judgment is perhaps another indication o
Lord Justice Jacksons determination to
ensure that Part 36 is interpreted strictly
and consistently.
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Retention of tenderedpayment deemed to besatisfaction of costs:Ida Okadigbo v TheCommissioner of Police forthe Metropolis - SupremeCourts costs Office (2011)
In late November of 2010, the defendant
made a Civil Procedure Rules (CPR)
Part 47.19 offer for roughly a third of
the claimants costs, stated to be in full
and final settlement. A cheque for the
sum offered was sent with the letter
and although the claimants solicitors
did not respond to the offer letter, they
banked the cheque 12 days later. Having
heard nothing for some eight weeks the
defendant wrote to the claimants solicitors
saying that the parties had achieved an
accord and satisfaction i.e. the claimants
costs were settled.
The claimants solicitors responded saying
that simply because they had not replied
to the defendants offer letter it did not
mean that the offer had been accepted
and subsequently set the matter down
for a detailed assessment hearing. The
court was asked to decide as a preliminary
issue whether the parties had achieved an
accord and satisfaction.
The defendant cited Court of Appeal
guidance on commercial cases that the
test was what a reasonable person would
have been led to believe by the conduct
of the other party. The claimant countered
that payments made under CPR 47.19
should be viewed in the light of normal
costs practices where cheques could be
accepted either in full and final settlementor as payment on account.
Senior Costs Judge Hurst rejected
the claimants arguments. He saw no
reason why the legal principles governing
commercial transactions could not also
be applied to costs. The defendants offer
was clear and if the claimant had wished
to reject it whilst retaining the money
tendered then (in line with the Court of
Appeal decision in Stour Valley Builders
v Mr and Mrs TP Stuart) she should
have made her position clear within a
reasonable period. On the facts of this
particular case, a reasonable period would
have been three weeks. The parties had
achieved an accord and satisfaction.
Comment: although the length o a
reasonable period will vary depending on
the acts o a case, a party receiving a
cheque in support o an oer they wish toreject, should make their position clear as
soon as possible ater banking the money.
Our thanks go to Weightmans Solicitors
for telling us about this case.
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Fraud
Claimant jailed for signingfalse Statement of Claim:Edward Nield and AcromasInsurance Co Ltd v GrahamLoveday and Susan Loveday -District Court (2011)
The applicants Mr Nield and his insurersAcromas sought to have the respondents
Mr Loveday and his wife committed for
contempt of court following an injury claim
made by Loveday.
The respondent Loveday alleged that he
had become a housebound invalid after
being injured in a road traffic accident
with Nield. Liability was admitted by
Nield but the extent of Lovedays injuries
was disputed. Nields insurers obtained
surveillance evidence showing that
Loveday could drive, walk unaided, climb
steps without difficulty and work on cars
all of which he claimed he was unable to
do post accident. It was also discovered
that he had driven to Italy and back on
holiday rather than been pushed through
the airport in a wheelchair in order to fly
there. Faced with this evidence Loveday
agreed to settle the original action for a
small proportion of the sum claimed and
agreed to pay Neilds costs.
Loveday had set out the false claims abouthis injuries in a signed witness statement
supported by a signed witness statement
from his wife. At the application hearing,
Mrs Loveday admitted contempt of court
but Mr Loveday maintained he had not
known what he was verifying.
Mr Loveday was found guilty of contempt.
The judge held that he had misled
his solicitor who drafted his witness
statement and that Loveday had clearly
known its exact contents as the draft
copy was marked with many handwritten
annotations containing information known
only to him. Both Loveday and his wife
understood the risks of signing statements
they knew to be untrue as his solicitor had
warned them in writing that they could be
jailed for contempt. Loveday must have
known that his blatantly false statements
would interfere with the course of justice.
He was given a nine month custodial
sentence. His wife received a six month
sentence suspended for eighteen months
in light of her guilty plea and previous good
character.
Comment: the custodial sentence passed
on this blatant raudster will hopeully, havesome deterrent eect on others seeking to
grossly exaggerate their claims.
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Liability
School not liable for failureto clear Rainwater:Maddison Hufton vSomerset County Council- Court of Appeal (2011)
A schoolgirl suffered a serious ligament
injury to one knee when she slipped on a
wet floor in her school hall. She brought
proceedings alleging that the school staff
had been negligent in permitting pupils
to walk directly from the playground into
the hall when it was raining, making the
floor wet. The school denied liability.
When it was raining, the direct entrance
was closed to pupils who were then
only permitted to enter via a foyer, which
stopped them treading water into the hall.
At first instance, the judge dismissed the
claim finding that the schools procedures
were reasonable and that the claimant had
simply suffered an unfortunate accident.
The claimant appealed arguing that the
school was negligent in having no proper
system for stopping the floor getting wetor for drying it if it did become wet.
The Court of Appeal held that the schoolsrisk assessment was reasonable and had
identified and put in place appropriate
control measures. If rain started during a
break, it would take a little while to close
off the direct entrance to the hall and this
was probably what had happened when
the accident occurred. The measures in
place met the standard of reasonable care
the law required. The evidence was that
this was not a frequent problem requiring
a system for mopping water up.
It is not possible, and the law
does not require, the occupier o
premises to take measures, which
would absolutely prevent any
accident rom ever occurring. What
is required both by common law
and by section 2 o the Occupiers
Liability Act 1957 is the exercise o
reasonable care.
Lord Justice Jackson
Comment: occupiers in England and
Wales may take some comort that the
Court o Appeal has recognised that the
deendants could not realistically cater or
every small brie accumulation o water that
might cause a all. The law requires only a
reasonable standard o care o occupiers.
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Unsigned steps nothazardous to wheelchairusers: Brenda Clark vBourne Leisure - Courtof Appeal (2011)
The claimant suffered serious injury
when she tried to negotiate steps at the
defendants bar in her wheelchair and fell
out. The bar was on two levels with the
different levels connected by a ramp on
one side of the room and steps on the
other. The claimant travelled up the ramp
to the upper level but later tried to go
back down the steps mistaking them for
another ramp.
At first instance, the claimant successfully
argued that the steps were a concealed
hazard and that the premises were in
breach of the Occupiers Liability Act 1957.
The defendant appealed.
The Court of Appeal held that the judge
at first instance had erred in placing
too great a weight on pre-action
correspondence. The defendants legal
department had mistakenly claimed that
there were signs and warning tape at
the top of the steps to warn people of
the drop in level when in fact there were
not. The judge had erred in interpreting
this as an admission by the defendant
that warning signs and tape should have
been placed at the top of the stairs. In
any event, what others including the
defendant, thought about safety, whilst
relevant, should not be determinative.
It was for the judge to come to his own
decision. On the evidence, the ramp
provided a safe means for the claimant to
go from one level to another. The stairs
were clearly visible and any wheelchair
user taking reasonable care for his or
her safety would avoid using them.
The premises were reasonably safe for
wheelchair users. The appeal was allowed.
I think that the judge was wrong
to conclude that the claims about
signage and tape amounted to a
concession that such measures
were necessary. I think Mr Aldis
(deendant counsel) is right to say
that the parties appear to have
been at cross-purposes or much
o the time. Also it appears that
the person in the legal department
o Bourne Leisure Ltd had not
at any stage taken ull written
instruction rom Mr Green the
manager. She was no doubt
unwise to write as she did but I do
not think that her words could be
taken as a concession as to the
need or warning signs or tape in
relation to the steps.
Dame Janet Smith
Comment: This case serves as a
reminder to be very careul about what issaid in pre-action correspondence and to
investigate thoroughly beore discussing
liability with a claimants solicitor. The
deendants legal department appear
to have been conused as to the
circumstances o the accident and
were corresponding with the claimants
solicitors without frst obtaining ull
instructions rom the deendants site
manager. They were ortunate that their
inaccurate written comments did not
prejudice the deence.
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Quantum
Court Allows Cost ofAlternative Treatment:Mohammed Najib v JohnLaing Plc - High Court (2011)
The claimant contracted mesothelioma
after exposure to asbestos whilst
employed by the defendant company. He
sought damages including a sum of just
over 15,000 for photodynamic therapy.
This was a treatment not available through
the NHS and well outside of mainstream
medicine where high doses of light were
used to try to destroy cancerous cells.
The defendants objected to paying for this
treatment which had failed to reduce the
tumour and which was not supported by
the claimants treating NHS physicians.
The claimant had opted for this unusual
treatment because he had been told
it could extend his life and because
the feared the painful side effects of
chemotherapy.
The court allowed the cost of the
treatment on the basis that, although the
treating physicians had not endorsedit, neither had they told the claimant
not to have it. The doctor who had told
the claimant about the treatment also
appeared to have appropriate medical
qualification. The treatment was expensive
but not unreasonably so given that the
claimant had been told it could extend his
life expectancy from two to seven years.
Comment: A court may well have
sympathy or a claimant suering pain
and/or reduced lie expectancy and on
the basis o this judgment is unlikely to
disallow the cost o alternative therapies
unless the claimant has been told in plain
terms that they will be ineective.
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Record Irish DamagesAward: Ingle v Petmaniaand OKeefes of Kilkenny Ltdand Health Service Executive -Irish High Court (2011)
The claimant suffered catastrophic brain
damage after contracting chlamydia
psittacosis, a bird disease that can also
infect humans, at her place of work.
The disease can be spread by dust
from the dried faeces of infected birds.
The claimant is thought to have inhaled
infected dust whilst working in a pet shop
that had failed to properly clean its parrot
cages or provide adequate health and
safety training.
The claimant received a lump sum
of3m and will also receive periodical
payments to cover the cost of her
annual care once enabling legislationis in place. The unfortunate claimant
cannot breathe normally, feed herself
or walk and requires 24-hour care
estimated as costing 450k a year.
Assuming the claimant lives as long as
she is expected to her total damages
could exceed the current record for the
largest Irish personal injury settlement
of7.5m.
Comment: another Irish case has been ear
marked or periodical payments despite the
act that enabling legislation or this type
o settlement is not yet in orce. Drating
enabling legislation is proving difcult, as
the Irish state is not in a position to oer a
convincing guarantee o payments in the
event that a compensator ails.
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3115/TAAMAUG2011
Q uropean Operations is a trading name of Q nsurance (urope) imited and Q Underwriting imited. Q nsurance (urope) imited and Q Underwriting imited
are authorised and regulated by the inancial ervices Authority. Q Management ervices (UK) imited and Q Underwriting ervices (UK) imited are both Appointed epresentatives
QBE European Operations
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30 enchurch treet
ondon
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fax +44 (0)20 7105 4019
www.Qeurope.com