Evidence submitted by the Bar Council
INTRODUCTION
1. The Bar Council Working Party on the
Compensation Bill comprises a number of barristers nominated by
the Law Reform Committee of the Bar Council, the Circuits and
a number of specialist Bar associations, including the Personal
Injury Bar Association and the Professional Negligence Bar Association.
The Working Party was set up following the desire of the Bar Council
to provide a response on behalf of the Bar as such to the Compensation
Bill when published. Some of the specialist Bar associations may
formulate their own responses to the Bill.
2. Following an invitation to the Bar Council
from the House of Commons Constitutional Affairs Committee to
provide written evidence in the context of its investigation of
the Compensation Bill, this document has been produced as the
Bar's written evidence. The Bar will be glad to offer further
assistance (possibly by providing a team of practitioners who
could elaborate on the issues) if called upon to do so by the
Committee.
3. This submission addresses the five questions
which are being considered by that Committee.
DOES THE
"COMPENSATION CULTURE"
EXIST?
4. The existence of a system by which those
who have suffered injury as the result of the fault of another
can claim compensation is a fundamental part of the UK legal system.
The fact that many thousands of injured people obtain compensation
each year through that system does not, of course, evidence the
existence of a "compensation culture". Similar jurisdictions
exist worldwide and the need to establish "fault" to
secure compensation is usually seen as both "fair" and
sensible economically.
5. The expression "compensation culture"
is used as a label (a) for what some believe is a recent increase
in claims based on greed or fraud or (b) to characterise claims
for compensation considered to be frivolous or detrimental to
the public purse or some socially beneficial activity. The Secretary
of State for Constitutional Affairs has described it as follows:[1]
"It's the idea that for every
accident someone is at fault. For every injury, someone to blame.
And, perhaps most damaging, for every accident, there is someone
to pay."
6. There seems little doubt that the public
has become increasingly aware of the avenues open for claiming
compensation. This may be due partly to the existence of advertisements
about how compensation can be claimed. [2]However,
that is a relatively recent phenomenon and the increased awareness
of rights to compensation probably pre-dates the development of
this kind of advertising. [3]Whilst
there may be legitimate concerns about certain types of advertising
and "touting" for business in this area (see paragraph
19 below), the fact that the public is better educated concerning
its legal rights and how to pursue them is generally to be welcomed
and not condemned. Moreover there appears to be no substantive
evidence to support the contention that (a) increased awareness
of the availability of compensation or (b) a "compensation
culture" is increasing the level of claims.
7. Our understanding of the Government's
view is that there is not in fact a "compensation culture"
in the UK[4].
This reflects the conclusion reached by the Better Regulation
Task Force in its May 2004 report entitled `Better Routes to Redress',
namely, that the existence of a compensation culture is "a
myth". For the reasons summarised in paragraphs 8-9 below,
it is our view that that conclusion is indeed correct. The problem,
it is said, is the "perception" that a compensation
culture exists[5].
The Better Regulation Task Force said that its "report looks
at what has created the perception of a compensation culture;
how that perception is fuelled; and the damage that the perception,
unless tackled, will do . . . ". We will deal below with
the question of whether any amendment or clarification of the
law of negligence is necessary to deal with this "perception".
8. The statistics contained in Table 1 of
the Better Regulation Task Force report indicates that the number
of accident claims had remained stable during the period 2000-03
and had actually declined in 2003-04 thus yielding an overall
reduction over the period. [6]The
Report suggested that those statistics might not provide an accurate
picture because many compensation claims are settled out of court.
We are not convinced that this is a valid criticism since the
figures from which Table 1 was compiled came from the Compensation
Recovery Unit and there is a statutory obligation to notify the
Unit of a personal injury claim even if that claim is subsequently
settled.
9. However, there is further evidence in
the form of the Annual Judicial Statistics (published by the DCA)
that reinforces the view that there is far less litigation about
compensation claims generally now than there was a few years ago.
The statistics for the Queen's Bench Division of the High Court
(where many of the more substantial personal injury claims, including
clinical negligence claims, are commenced and, in default of settlement,
are tried) show an enormous diminution in the general number of
claims instituted as between 1995 and 2004. [7]A
lesser (about 35%) reduction in "money claims" (which
will include a significant number of personal injury and clinical
negligence claims) instituted in County Courts over a similar
period also evidences a reduction in the volume of litigation
in these areas. [8]The
Queen's Bench Division statistics show a particularly significant
drop after 1999, when the Civil Procedure Rules were implemented
and Conditional Fee Agreements came to replace Legal Aid in most
ordinary personal injury claims.
10. Although the Better Regulation Taskforce
spoke of "the apparent explosion of litigation in the latter
half of the 1990s and the early years of the 21st century",
we do not believe overall that there has been such an explosion:
in fact the evidence is very much the other way. We do not have
any hard evidence that particular types of claims, such as claims
against doctors or teachers, are on the increase. There is anecdotal
evidence of school activities being curtailed and of widespread
risk aversion because of the fear of being sued, but some firmer
evidence than we have as yet seen needs to exist before any significant
reform in the present compensation system is required. Anecdotal
evidence of the type mentioned is, of course, newsworthy and excites
comment, but isolated incidents which receive publicity do not
assist in assessing the reality of the problem.
11. It is also the experience of those involved
in the litigation process that a headline concerning a particular
case may appear on the first day of a trial, but the fact that
the claim is subsequently dismissed is not reported, or is reported
in a much less obvious way. This can give a distorted impression
of what is going on in the legal system. There is, of course,
little, if any, reporting of cases that are abandoned or settled.
WHAT HAS
BEEN THE
EFFECT OF
THE "NO-WIN-NO-FEE"
CONTINGENCY FEE
AGREEMENTS?
12. We would correct one feature of the terminology
in the question, namely, that what are now described generally
as "no-win-no-fee" agreements are conditional (not contingency)
fee agreements and are referred to as "CFA's" for short.
"Contingency fees are where the fee paid is a percentage
of the damages. It can either be a percentage taken from the damages,
or a percentage of the damages but paid in addition to the damages."—Better
Regulation Task Force report, p 29. Contingency fees are illegal.
13. At the time of their introduction as
the means of financing the bulk of personal injury litigation
following the withdrawal of Legal Aid, there were differing views
about the extent to which CFAs would in fact increase access to
justice. That debate continues, but there is a strong feeling
amongst practitioners experienced in the field of personal injury
litigation, in particular, that the removal of Legal Aid and its
replacement with a system of CFAs has precluded the bringing now
of claims which are difficult, but which are nonetheless potentially
valuable and meritorious. However, we recognise that CFAs are
now a permanent feature of the funding landscape in this field.
14. Although CFA's have become a more significant
vehicle for funding compensation claims since 2000, and indeed
the number of providers of appropriate insurance cover has also
increased, the evidence to which we have referred above does not
suggest that they have led to an increase in the overall number
of accident claims. We do not claim to have detailed evidence
about their effect in terms of increasing or decreasing the number
of claims, but if, as we think, they may have had an effect in
reducing the number of claims, it is probably because responsible
litigation practitioners will only take on a case on a CFA basis
if the claim has a reasonable prospect of success because otherwise
those practitioners will not be paid for the work done. It follows,
therefore, that the use of CFA's may well be discouraging frivolous
or unmeritorious cases—but also, unfortunately, those in
the "difficult but viable" category referred to in paragraph
12.
15. If, contrary to our perception, CFA's
are producing a greater number of fraudulent or suspect claims
and that "touting" for business in hospitals by claims
management organisations is generating compensation claims from
those who would not otherwise have claimed, then that would be
a reason for regulation of the claims management industry (which
we would support: see paragraphs 19-20 below), not a ground for
criticism of the CFA system as such or for any amendment or clarification
of the law of negligence.
IS THE
NOTION OF
A "COMPENSATION
CULTURE" LEADING
TO UNNECESSARY
RISK AVERSENESS
IN PUBLIC
BODIES?
16. We have referred above to the view that
there is within the UK a "perception" of a "compensation
culture" rather than "compensation culture" as
such.
17. Others may be in a better position to
judge this than us, but there is, in our view, little concrete
evidence to support the contention that this perception is widespread,
that the current state of the law of negligence has led to it
or that there is unnecessary risk averseness in public bodies
as a result. Local authorities carry out numerous activities which
inevitably expose them to the risk of claims for compensation.
There is no compelling evidence that they refrain from any of
those activities from fear of being sued. On the contrary, the
possibility that local highway authorities may be the subject
of tripping and slipping claims tends to lead to better systems
of inspection and maintenance of roads and pavements so that those
claims can be defeated. This is a benefit to society not a disadvantage.
This "public benefit" aspect to the existence of the
right to redress by means of a negligence claim has also led,
for example, to improved hospital and clinical practice. The introduction
of hospital protocols (reflecting good practice, not defensive
practice) probably occurred at least partly because of deficiencies
in the then existing practices highlighted in certain cases. The
abandonment of outmoded clinical practices will have come about
largely through knowledge that pursuing them could lead to a negligence
claim. Other examples could doubtless be given.
18. The extent to which doctors, teachers
and other professionals or groups are truly concerned about a
growth in compensation claims is not clear. Whilst no-one would
wish to be the target of a claim for negligence, (a) any such
claim is invariably covered by insurance and (b) there are far
stronger suggestions that the concerns of professional people
relate to being the subject of criminal prosecution for the consequences
of their ordinary work activities rather than having to deal with
a compensation claim. For example, a teacher who supervises an
out-of-school activity in which a child dies could easily be the
subject of a manslaughter charge. The words of the Secretary of
State for Constitutional Affairs quoted in paragraph 5 above could
so easily be read to embrace the possibility of criminal proceedings
against the person said to be at fault.
19. We believe that if it is the case that
public bodies and other organisations are more risk averse than
in the past, then that is as likely to be a consequence of the
prevailing statutory regulatory regime than any perceived "compensation
culture". There are a large number of health and safety regulations
which require employers to carry out risk assessments and to reduce
risks to a minimum (see, for example, regulation 4 of the Manual
Handling Regulations 1992 and regulation 3 of the Management of
Health and Safety at Work Regulations 1999). Where an employer
has assessed an activity as carrying a risk and then has reduced
or eliminated the risk to protect his employees, the activity
will have been modified accordingly. That is not a consequence
of the current state of the law of negligence.
SHOULD FIRMS
WHICH REFER
PEOPLE, MANAGE
OR ADVERTISE
CONDITIONAL FEE
AGREEMENTS BE
SUBJECT TO
REGULATIONS?
20. Given the evidence contained in the
Better Regulation Taskforce report of some of the practices engaged
in to date, the answer is plainly "yes". There would,
we believe, be strong support for appropriate regulation in this
context.
21. The object of the proposed regulations
should be to maintain an open market for the provision of CFA's
to the public whilst ensuring that the organisations which provide
them do so in a proper manner.
SHOULD ANY
CHANGES BE
MADE TO
THE CURRENT
LAWS RELATING
TO NEGLIGENCE?
22. The modern law of negligence is founded
in Lord Atkin's statement of principle in Donoghue v Stevenson
[1932] AC 562, the famous case about the snail in the bottle of
ginger beer:
"You must take reasonable care to avoid acts
or omissions which you can reasonably foresee would be likely
to injure your neighbour."
23. However, this bald statement of common
law principle has been modified and developed over the years.
The setting of the boundaries of the law of negligence and the
scope and content of duty and standard of care (and indeed causation
of damage) have evolved to meet the needs of society. This is
one of the advantages of a flexible common law system as opposed
to that of a codified system of law.
24. As Lord Oliver said in Caparo Industries
plc v Dickman [1990] 2 AC 605, 633:
". . . the postulate of a simple
duty to avoid any harm that is, with hindsight, reasonably capable
of being foreseen becomes untenable without the imposition of
some intelligible limits to keep the law of negligence within
the bounds of common sense and practicality. Those limits have
been found by the requirement of what has been called a "relationship
of proximity" between plaintiff and defendant and by the
imposition of a further requirement that the attachment of liability
for harm which has occurred be "just and reasonable"."[9]
25. In Watson v British Boxing Board of
Control Ltd [2001] QB 1134, Lord Phillips said that the House
of Lords in Caparo and the Court of Appeal in other cases had
approved the approach to the development of the law of negligence
recommended by Brennan J in the High Court of Australia in Sutherland
Shire Council v Heyman (1985) 157 CLR 424, 481, where he said:
"It is preferable, in my view,
that the law should develop novel categories of negligence incrementally
and by analogy with established categories, rather than by a massive
extension of a prima facie duty of care restrained only by indefinable
`considerations which ought to negative, or to reduce or limit
the scope of the duty or the class of person to whom it is owed'."
26. It follows from this that the development
of the law of negligence by the courts follows an incremental
approach, one of the essential ingredients in any new situation
under consideration being whether it is "fair, just and reasonable"
to impose liability. However, the latter consideration tends to
narrow the ambit of potential claims than to widen it. As Sedley
LJ put it in Dean v Allin & Watts [2001] PNLR 921, 927:
"After a century and a half of
development of the law of negligence, we know there is no universal
legal formula by which the presence or absence of liability can
be determined and policy has correspondingly come to fill some
of the places. What is not always understood in this context is
that the `fair, just and reasonable' test is not a gate opening
on to a limitless terrain of liability but a filter by which otherwise
tenable cases of liability in negligence may be excluded."
27. As will be apparent from the foregoing,
it is necessary for a court, when faced with a new situation in
which a breach of duty is alleged, to consider the general "policy
issue" of whether it is "fair, just and reasonable"
to impose a duty of care. This has not infrequently involved questions
concerning the social utility of the activity under scrutiny.
Our supporting documents demonstrate the attitude of the courts
to "public policy" arguments. The dividing line between
what a court will feel able to take into account and what it will
not may be difficult to draw. However, our view is that the courts
have largely struck the right balance in ensuring that the imposition
of a duty of care does not impede ordinary, desirable activities.
28. This view also appears to coincide with
the Government's view. In the first place, the Better Regulation
Taskforce itself said that:
"the judicial process is very
good at sorting the wheat from the chaff."
The Secretary of State for Constitutional Affairs
took up this line in his speech on 22 March 2005 when he said
this:
"In reality, the way the courts
look at claims is well-established and broadly consistent. The
Better Regulation Taskforce report . . . was quite clear on this
point."
He went on to say, however, that—
"the consequence of people thinking
the courts are awarding compensation in new ways is causing problems."
29. We will not extend this submission by
substantial reference to past cases, but two relatively recent
cases will, we believe, demonstrate that the courts are alive
to the need to balance the social importance and utility of an
activity or sphere of life when considering whether to impose
a duty of care or whether, when such a duty is to be imposed,
care needs to be shown by the courts in finding that there has
been a breach of that duty.
30. In Tomlinson v Congleton Borough Council
[2004] 1 AC 46 the House of Lords had to consider whether a local
authority was in breach of a duty of care as occupier of a lake
formed in a disused quarry when it failed to prevent swimming
or warn against the possibility of danger. A young man dived in
and broke his neck. The claim failed and it is plain from the
speeches of the Law Lords that they were well aware of the issues
of social utility and free will when determining whether there
had been a breach of a duty of care. Lord Hoffman was of the opinion
that there were two particularly important considerations:
"41 . . . the first is the social
value of the activities which would have to be prohibited in order
to reduce or eliminate the risk from swimming. And the second
is the question of whether the council should be entitled to allow
people of full capacity to decide for themselves whether to take
the risk.
42 . . . the majority of people who
went to the beaches to sunbathe, paddle and play with their children
were enjoying themselves in a way which gave them pleasure and
caused no risk to themselves or anyone else. This must be something
to take into account in deciding whether it was reasonable to
expect the council to destroy the beaches.
45 I think it will be extremely rare
for an occupier of land to be under a duty to prevent people from
taking risks which are inherent in the activities they freely
choose to undertake upon the land. If people want to climb mountains,
go hang-gliding or swim or dive in ponds or lakes, that is their
affair. Of course the landowner may for his own reasons wish to
prohibit such activities . . . . But the law does not require
him to do so."
31. In Phelps v Hillingdon LBC [2001] 2
AC 619 the broad issue was whether a claim in "educational
negligence" could be brought as a result of the alleged failure
of various education professionals to identify the dyslexia of
the various claimants. Although the House of Lords felt that,
in principle, a claim based on such an allegation could be made,
caution about it should be shown. Lord Slynn of Hadley said this:
"The difficulties of the tasks
involved and of the circumstances under which people have to work
in this area must also be borne fully in mind. The professionalism,
dedication and standards of those engaged in the provision of
educational services are such that cases of liability for negligence
will be exceptional. But though claims should not be encouraged
and the courts should not find negligence too readily, the fact
that some claims may be without foundation or exaggerated does
not mean that valid claims should necessarily be excluded."
The proposed change in/clarification of the
law
32. The change or clarification in the law
of negligence proposed in clause 1 of the Compensation Bill is
entitled "Deterrent effect of potential liability".
The proposed wording is as follows:
"A court considering a claim in
negligence may, in determining whether the defendant should have
taken particular steps to meet the standard of care (whether by
taking precautions against a risk or otherwise), have regard to
whether a requirement to take those steps might:
(a) prevent a desirable activity from
being undertaken at all, to a particular extent or in a particular
way; or
(b) discourage persons from undertaking
functions in connection with a desirable activity."
The intention is that a court considering
whether a person is in breach of the standard of care in a negligence
action may take into account the desirability of the activity
which gave rise to the alleged breach.
The proposal is unnecessary and undesirable
33. The intention behind the clause is,
of course, entirely legitimate. The essential question, however,
is whether it is necessary to enact legislation to achieve what
is desired. Our position is that legislation is neither necessary
nor desirable.
34. In paragraph 12 of the Explanatory Notes
the draftsman of clause 1 of the Bill explains that:
"This provision reflects the existing
law and approach of the courts as expressed in recent judgments
of the higher courts."
35. For reasons which will be apparent from
what has been stated above, we agree with that statement and do
not see the need to enact legislation which merely reflects the
current law, particularly if there is a risk that legislation
might be the subject of difficulties of interpretation.
36. The expression "desirable activity"
is an elusive concept and introduces a significant subjective
element into the law of negligence which is founded on the objective
criterion of what is "reasonable". What may be regarded
as "desirable" by one judge may not coincide with the
view of another. And by what standards, and on what evidence,
is the decision to be made in any case? Whilst, of course, it
might be said that in determining what is "reasonable"
some degree of subjectivity is involved, the word "reasonable"
itself connotes the need to take an overview of what the ordinary,
reasonable person might think of a situation. The use of the word
"desirable" does not necessarily carry the same message.
37. There are other potential problems with
the clause.
(i) It applies only to claims framed
in negligence. Many compensation claims are capable of being presented
on the basis of a breach of statutory duty as well as negligence.
Indeed in some cases (for example, claims against tour and holiday
companies) the claim may also be framed as a breach of contract.
It is plainly undesirable that a court faced with a claim based
both in negligence and on breach of statutory duty (and/or a breach
of contract) would be required to consider the application of
the clause to one cause of action but not the other(s) in respect
of the same accident.
(ii) It introduces the prospect of there
being a higher standard of care for activities that are not "desirable"
and a lower standard for those that are. That cannot be right.
38. Moreover the clause is permissive rather
than mandatory, yet there is no indication of the circumstances
in which a court should or might choose to disregard the desirability
of an activity when determining liability in negligence.
39. In conclusion we do not consider that
there is any need for statutory change to the law of negligence
in this area and believe that clause 1 of the Compensation Bill
is unnecessary. We think that the courts should be allowed to
continue both to develop and at the same time "rein in"
the law of negligence as they have done (by common consent, successfully)
over the years without having to face a super-added statutory
gloss on the process.
40. If there is a need to ensure that a
court has all the necessary information before it to assess the
"social value" of an activity (and lack of information
is cited by judges as one of the reasons for not being able to
take this kind of factor into account), then (a) it is open to
any party (particularly in this context, the Defendant) to invite
the court to consider suitable evidence and/or (b) the court has
all the necessary case management powers under the Civil Procedure
Rules to ensure that evidence from appropriate sources can be
given or other parties added to the proceedings to ensure that
the fullest possible information is available. None of this requires
statutory authority; it is merely requires the party who wants
the relevant information and evidence before the court to ensure
that it is available and for the court to be ready to receive
it.
David Foskett QC, Christopher
Gibson QC, Susan Rodway QC, Stephen Worthington,
Simon Levene, Patrick Limb
Bar Council
November 2005
1 Speech to Health and Safety Executive on 22 March
2005 Back
2
The role of the internet in this regard cannot be overlooked.
A "Google" search for the word "accident"
will lead immediately to a number of avenues for advice Back
3
The role of "ambulance-chasers", a pejorative expression
used to describe lawyers who turned up at the scene of an accident
shortly after it occurred, or who sought out the victims of a
significant accident and provided them with visiting cards, has
been known for many years Back
4
In his speech to the Institute of Public Policy and Research
on 26 May 2005 (see footnote 6) the Prime Minister referred to
the "so-called compensation culture" and the Secretary
of State for Constitutional Affairs said in a speech on the issue
on 17 November 2005 that ". . . we, in Government, want to
show that we are committed to preventing a compensation culture
from developing" Back
5
"Here in Britain, whatever the actual state of the so-called
compensation culture, the perception of it and the effects of
that perception are real. In England in 2003 there were between
7 and 10 million pupil visits on school trips. Sadly, there was
one fatality. But only one. Between 2000 and 2005 the overall
number of accident claims fell by 5.3%. Over the same period,
accident claims against local authorities, schools, volunteering
organisations and other public sector bodies fell by 7.5%. In
2000, the cost of litigation in the UK as a percentage of GDP
was less than a third of that in the US. Tort costs in the UK
in 2000 were 0.6% of GDP. This is the lowest of any developed
nation except Denmark. But the facts too often do not prevail.
You may recall the stories of the girl who sued the Girl Guides
Association because she burnt her leg on a sausage or the man
who was injured when he failed to apply the brake on a toboggan
run in an amusement park. Neither of these cases produced big
compensation awards in the courts. But this is not the impression
that is left. The headlines have an after-life. They leave behind
the sense that, not only are such cases being brought all the
time, but that huge sums of money are being wasted. This impression,
in turn, has genuine effects. Public bodies, in fear of litigation,
act in highly risk-averse and peculiar ways."-the Prime Minister,
speech to the Institute of Public Policy and Research on 26 May
2005. ". . . the problem is not about legal niceties: the
notion that people are `having a go' is hindering organisations
from going about their normal business. Some people, wrongly,
think the law has shifted into a new territory-a territory that
favours spurious claims. This is a misperception and a damaging
one at that."-the Secretary of State for Constitutional Affairs
on 22 March 2005. "However often we point out that claims
are not in fact going up, people still believe they are. The idea
of a compensation culture gains credence by this misperception."-the
Secretary of State for Constitutional Affairs on 17 November 2005 Back
6
In the Prime Minister's speech on 26 May 2005, quoted in footnote
5, it will be noted that he drew attention to the fact that between
"2000 and 2005 the overall number of accident claims fell
by 5.3%" and that "over the same period, accident claims
against local authorities, schools, volunteering organisations
and other public sector bodies fell by 7.5%" Back
7
Judicial Statistics Annual Report 2004, Pie Chart at p. 32 Back
8
Judicial Statistics Annual Report 2004, Table 4.1 Back
9
Lord Bridge of Harwich said this in the same case at pp 617-618:
" . . . in addition to the foreseeability of damage, necessary
ingredients in any situation giving rise to a duty of care are
that there should exist between the party owing the duty and the
party to whom it is owed a relationship characterised by the law
as one of "proximity" or "neighbourhood" and
that the situation should be one in which the court considers
it fair, just and reasonable that the law should impose a duty
of a given scope upon the one party for the benefit of the other" Back
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