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DCA Consulation - The Law on Damages
The Government's consultation "The Law on
Damages" closed on 27 July 2007. The Government'spaper is available
at http://www.justice.gov.uk/publications/1367.htm or
Click here to
read Browne Jacobson's full response.
The Government's paper
The Government deals with important principles
of damages law and covers a number of key areas:
1. Dependency and
bereavement claims
2. Claims in relation to
psychiatric illness
3. "Collateral benefits"
4. The interface between
damages for care, and care from statutory services (Sowden/Crofton
issues)
5. The valuation of claims
for alternative accommodation
6. Aggravated, exemplary and
restitutional damages
7. Damages in intellectual
property claims, including additional damages
A principled approach
The Government sets out a number of principles
underlying their proposals:
a) There should be no change
in the law unless it will bring positive identifiable benefits
b) The Claimant should be
compensated for losses, but only once and, where practicable, at
the expense of the tortfeasor. Double recovery should be
avoided
c) The Court should be
allowed as much flexibility as possible in considering whether
damages can be awarded in a particular case
We believe that these are sound principles but
priority should be given to principles of
certainty and avoidance of double
recovery.
The other principles set out in the paper,
such as the need for judges to have flexibility when determining
damages and the “tortfeasor pays” principle, are important, but we
do not consider it appropriate to seek to achieve these at the
expense of certainty, or if it is likely to lead to double
recovery.
Claims relating to death
The Government sets out proposals for reform
both in relation to dependency claims under the Fatal Accident
Acts 1976 (FAA) and claims to bereavement damages. Proposals
include:
a) Residual category of
individuals eligible to claim under the FAA for those who can show
any kind of past dependency
b) The retention, and in
some cases extension, of restrictions as to factors that can be
taken into account to reduce dependency claims (eg the prospect of
remarriage)
c) Clarification of
the purpose of bereavement damages
d) Extension of bereavement
damages, most significantly to children and to partners who have
cohabited for at least two years
We do not support the proposed extension of
the test for those entitled to make dependency claims. A death may
affect a broad range of individuals, but it is not reasonable for
all those affected to expect to recover damages. Damages should be
limited to those who have been deprived of benefits that they could
reasonably expect to have continued but for the death.
Where new sources of dependency have arisen,
or are likely to arise, for example through remarriage, then these
should be taken into account in order to avoid double recovery.
Defendants are not likely to abuse the opportunity to investigate
future sources of dependency, but in any event the Judiciary should
be trusted to control evidence appropriately. The judiciary can
also be relied upon to weigh up this evidence, based on experience
of handling similar issues, for example in the family courts.
In relation to bereavement damages, the
Government's proposals are reasonable. They will make the list of
eligible claimants consistent with the FAA, but will retain a
clearly defined test of eligibility.
Mesothelioma claims
The Government uses this paper as an
opportunity to canvass opinion as to an appropriate procedure to
address the need for those suffering mesothelioma to receive
compensation in a timely manner, while maintaining the right for
dependents to make a claim under the FAA.
We consider that any bespoke procedure is
likely to be slow to implement and costly to operate. We make
proposals whereby a Part 7 claim, with an interim payment and
appropriate stay, can be utilised to achieve the required
result.
Psychiatric injuries
The Government proposes no change to the
current common law tests of eligibility to claim in relation to
psychiatric injury and we believe this is appropriate. The existing
test strikes a fair balance in determining who should be eligible
to bring a claim and is now sufficiently clear that it rarely gives
rise to satellite litigation.
Collateral benefits
The Government has considered the way in which
courts take account of sick pay, pensions, charitable payments,
payments under policies of insurance and gratuitous care in
awarding damages. Certain of these heads, for example charitable
payments, are currently disregarded completely when damages come to
be assessed. Others, for example sick pay, will only be payable by
a tortfeasor where the collateral benefit has been provided in such
ways to give rise to a subrogated claim.
The Government's general position is that all
collateral benefits should be disregarded in order to achieve the
‘tortfeasor pays’ principle. It can be left to collateral benefit
providers to contract for recovery, in order to prevent double
recovery.
In our view, the Government's proposals will
inevitably give rise to double recovery. It will often not be
possible for collateral benefit payers to contract for recovery,
for example where terms of the payment are already set under an
employment or insurance contract.
We believe that collateral benefits should
reduce damages in all cases. Claimants should recover only for
losses actually incurred. Collateral benefit payers are and should
remain able to contract to recover their outlay when damages are
received. The current law provides for a subrogated claim to be
brought in such cases.
The provision of care treatment or
funding by statutory services
The Government's proposals focus upon s2(4) of
the Law Reform (Personal Injuries) Act 1948 and the availability of
NHS treatment. They do not deal with the key issues affecting all
defendants handling large cases, namely the interplay between
damages provided for care provision and state provision of care
services by Local Authorities and the NHS, pursuant to a complex
statutory framework. We consider that these areas need to be
considered together and the statutes and regulations relating to
entitlement to care and funding need to be made clear and
consistent.
The Government considers in a limited way a
scheme for direct funding of care providers by defendants. It
contemplates the possibility of certain aspects of treatment being
provided by the NHS, subject to recovery of costs. For many
reasons, we believe that this would be undesirable and
unworkable.
We consider that the current approach of
allowing the court to determine funding and treatment which is
likely to be received from statutory services, having considered
all relevant evidence, remains the best way of dealing with these
issues. This exercise will be simplified if our proposal for
clarification of the statutory and regulatory regime is
adopted.
Browne Jacobson is currently developing a
protocol for co-operation between statutory services and defendants
to claims involving Sowden/Crofton issues which we hope will assist
both defendants and statutory services in dealing with these claims
in an efficient and cost effective manner.
The use of capped indemnities and reverse
indemnities in this type of claim is an effective means of reducing
the risk of double recovery. Such indemnities are often agreed in
claims involving Sowden/Crofton issues but have not yet been
ordered by the courts. We believe this should be addressed by
legislation and/or amendment to the Civil Procedure Rules.
We do not consider that this important area
has been adequately explored within the Government’s consultation
paper and this is a missed opportunity. We have attempted to
address the broader issues in our response but have invited the
Government to consult further in relation to this field if our
proposals are not adopted.
Accommodation claims
The Government seeks to address concerns that
claimants who require alternative accommodation as a result of an
injury may not always receive adequate funds on payment of an award
for damages to allow them to purchase the property they need. The
Government's proposals involve defendants paying the capital cost
of accommodation, either without any provision for recovery, or in
return for charge over the property.
We do not consider that this is an area in
which reform is needed. The current Roberts v Johnstone approach
allows claimants to recover losses incurred through setting aside
funds to purchase property and the claimant has the benefit of an
investment in the form of his property. This avoids double recovery
and gives both parties a "clean break" at the end of a claim. We
are of the view that it should be maintained.
Aggravated, Exemplary and
Restitutional damages
The Government proposed no significant changes
to the law in these areas. We believe this is right. We are not
aware of any difficulties or concerns that would justify a change
to the law.
Intellectual Property
(IP)
The government has proposed replacement of
'additional damages' within IP legislation with the term '
aggravated and restitution damages'. It has invited comments as to
the efficacy of the IP system of damages more generally.
We consider the principles of IP damages are
sound. We do not believe there is need to replace well established
and well understood terms.
We are concerned, however that lower value IP
rights may not receive adequate protection due to the potential
cost and complexity of proceedings. We have previously proposed to
the Government that an IP fast track procedure should be introduced
for some such claims. We consider this should incorporate a tariff
of damages to be utilised in the absence of evidence from the
parties in support of a different award.
For more information please contact Sarah
White.
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