Response by Aviva to the Ministry of Justice
consultation paper on the Civil Law Reform Bill
FOREWORD
Aviva are the UKs number one and the world's
fifth largest insurer, employing around 54,000 people across
the world. Currently we have a 15% share of the UK insurance market,
and in 2008 handled over 75,000 personal injury claims
made against our policy holders, therefore we are a major user
of the England and Wales Civil Litigation system.
Aviva has restricted its responses to the areas
which it considers it is best placed to comment upon. In all its
responses though, Aviva strives to get over a primary message
that whilst we support the aim of the Bill to provide a fairer
and modern civil law system, any changes should ensure fair outcomes
whilst keeping damages at a proportionate level. Unless, the potential
reforms are cost neutral overall, it will be appreciated that
the compensator will need to increase premiums to cover any additional
financial burden. The need to recoup additional cost will affect
the NHS too.
Aviva supports the aim of the Bill and would
be willing to be involved in further discussions and/or consultations
that may assist in achieving a fair and modern compensation system.
Do you have any comments on the draft clauses
of the Bill relating to the law of damages?
DEPENDENCY DAMAGES
UNDER THE
FATAL ACCIDENTS
ACT 1976
Extending the statutory list of those entitled
to claim for financial loss
1. We do not support the proposal to add
to those eligible to claim as dependents under s 1(3) of the Fatal
Accidents Act 1976 a residual category to enable anyone who
was being wholly or partly maintained by the deceased immediately
before the death to bring a claim.
2. We are concerned as to how the Courts
would define and interpret the term "wholly or partly maintained",
and believe it could lead to some unjust decisions. Even where
financial dependency has to be proved, such a broad approach could
produce anomalies. For example it would be inappropriate for cohabitants
of short duration to be able to bring a claim. A two year qualifying
period whilst arbitrary does act as a filter and ensure some level
of permanence to the relationship. To have no qualifying period
is also inconsistent with the proposals elsewhere in the Bill,
such as having a two year qualifying period in relation to bereavement
damages and for existence of a financially supportive cohabitation
when calculating dependency claims.
3. From a practical perspective, in our
opinion adding a residual or "catch all" category to
those eligible to bring a dependency claim will lead to delay
whilst investigations are completed, incur additional costs and
increase litigation due to disputes, at least until the courts
have demonstrated how they will define and interpret the term
"wholly or partly maintained".
4. We would therefore propose a new subsection
1 3 (h) of the Fatal Accidents Act (FAA) 1976 of:
"any person who had been wholly or partly maintained by
the deceased for a two year period immediately before the date
of death "
Claimant's remarriage/civil partnership/cohabitation
5. We do support the proposal to amend section
3(3) of the Fatal Accidents Act 1976 to provide the fact
(but not the prospect) of a persons remarriage, entry into a civil
partnership, or financially supportive cohabitation of at least
two years duration following the death must be taken into account
when assessing a claim for damages under the Fatal Accident Act
1976 by that person.
6. Damages are intended to be compensatory
and reflect as far as possible the loss arising from the Defendants
negligence. Remarriage can substantially impact on a person's
financial circumstances. Therefore it would not be equitable to
allow a dependant to receive both damages through the dependency
claim relating to their previous marriage and the financial benefits
of remarriage. We also support the proposal that financially supportive
cohabitation should also be taken into account as this reflects
modern society where people tend to live together in a financially
supportive relationship before or instead of marriage. Under the
Bill it is proposed Cohabitants will enjoy the same benefits as
spouses under the Fatal Accident Act, it is therefore correct
that they should also be included in the amendment to section
3(3) in order to maintain consistency of approach.
7. However, we do foresee problems with
the present drafting of s2 subsection 3. In the definition
of "relevant relationship" it provides that "at
the time when the action is brought A lives with another person
B, as B's husband or wife or civil partner." At the
time when the action is brought could be interpreted as at the
time that the claim is first notified to the defendant or the
time legal proceedings are commenced. For example
Accident Date 1/1/2010. Claim made by deceased's
dependant (X) in March 2010. X moves in with another person in
June 2010. The Defendant will wish to wait for 2 years post
June 2010 before settling the case—there is therefore
an avoidable barrier to settlement.
Accident Date 1/1/2010. Y is seriously injured
and remains in a persistent vegetative state. Claim made by Y's
partner X in March 2010. X starts a new relationship in June 2010.
Claim issued in January 2011. Y dies two years post accident.
8. This lack of clarity will result in increased
litigation. We would suggest that it would be more appropriate
to provide that "at anytime after the deceased's death,
A is living with another person B as B's husband or wife or civil
partner, (b) A has so been living with B for at last two years
and (c) A is maintained by B "
Parent's remarriage/entry into civil partnership/cohabitation
may be taken into account when assessing a claim for damages from
eligible children
9. We do not agree with the proposal that
in relation to a claim on behalf of eligible children, the fact
that the child's surviving parent had remarried or entered into
a civil partnership or a financially supportive cohabitation of
at least two years duration may be taken into account where
the judge considers it appropriate to do so. In our opinion the
remarriage/entry into civil partnership/financially supportive
cohabitation of two years or more should always be taken
into account when calculating children's' dependency claims, as
this will ensure that the damages compensate as accurately as
possible the loss suffered. In today's society marriage arrangements
and attitudes are more fluid and there is certainly not the stigma
attached to remarriage as was perceived when the Fatal Accident
Act was introduced. Again we support the inclusion of cohabitation
of at least two years, as a factor to be taken into account on
equal terms as remarriage/entry into civil partnership.
10. If the proposal remains that the Court
may take into account the surviving parents remarriage/entry
into civil partnership/financially supportive cohabitation of
at least two years, then in practice this is likely to be an area
of dispute on every case and causing an increase in litigation
with associated delay and extra costs incurred.
Breakdown of Marriage/Civil Partnership
11. We disagree that the prospects of breakdown
in the relationship between the deceased and their spouse or civil
partner should only be taken into account where one party has
petitioned for divorce, judicial separation or nullity; or begun
the procedure for dissolution of civil partnership; or is no longer
living together. The court should be able take into account the
full history of the relationship of the couple, for example, where
the couple had had periods of separation and reconciliation in
the past. This will provide the court with an informed perspective
of the relationship and enable the court to take into consideration
all material and relevant factors.
Breakdown of cohabiting relationship
12. We disagree that section 3(4) should
be repealed. While it is desirable to treat cohabiters fairly
under the FAA, the court should still be allowed to recognise
that cohabitation does not have the same expectation of the relationship
enduring as with marriage or civil partnership. All relevant research
suggests that cohabiters are more likely to separate than a married
couple or civil partnership and this must be taken into consideration.
The Section 1 (b) definition of a cohabiter entitled to claim
for dependency recognises that there must be some degree of permanency
to the relationship. We also note that if Section 3 (4) is
repealed, then cohabiters would be in a better position than married
couples or civil partners, since it is proposed that the prospect
of a breakdown in marriages or civil partnerships can be taken
into account in certain circumstances (see 9 above). Moreover,
in our experience, the courts have had no real difficulty in applying
Section 3 (4) in practice.
DAMAGES FOR
BEREAVEMENT UNDER
THE FATAL
ACCIDENTS ACT
1976
13. We agree that the statutory list of
people eligible to claim bereavement damages should be extended
to include; children under 18 (including adoptive children)
for the death of a parent, cohabitants of at least two years durations
for the death of a partner, unmarried fathers with parental responsibility
for the death of a child under 18.
14. We agree that where a spouse and civil
partner or cohabitant are both eligible to claim bereavement damages,
the award should be divided equally between the two of them.
15. We agree that an award of £5,900 (or
such future sum that represents half of the full award) should
be made to each eligible child of the deceased under the age of
18. Bereavement damages are not "damages" in the sense
that they are not aimed at compensating the claimant, or reflecting
the value of the deceased's life in any way. Neither are they
a punishment of the negligent person who caused the death. Rather,
bereavement damages are a token payment in acknowledgment of a
person's grief. The principle behind an award to children as close
relatives must be correct. Where there are several children the
liability of the Defendant increases. However, it cannot be right
that an award to a child is simply reduced proportionally to the
number of his/her siblings. Although it can be shared a parent's
award will not fall below £5,900 or 50% of the total
award. The figure of £5,900 per child, therefore seems
sensible.
Damages for Gratuitous Care
16. We agree that the current arrangements
whereby the claimant holds in trust for the carer damages for
gratuitous care should be replaced with a personal legal obligation
to account to the carer for gratuitous services actually provided.
The personal legal obligation should apply to future as well as
past care, as there is no justification for a different approach
and consistency should be maintained.
17. We agree that the personal legal obligation
should apply regardless of carer, but as at present past gratuitous
care damages should not be awarded where the care is provided
by the tortfeasor. It would go against public policy to allow
such an award, and there is no justification for excluding this
area from a principle which is applied elsewhere in personal injury
law.
18. We do not agree with the proposal to
amend s3 (1) of the Fatal Accidents Act 1976 to allow
damages to be awarded for services gratuitously provided to a
dependant of the deceased. The wide interpretation of s4 of
the Fatal Accidents Act 1976 already allows damages to be
awarded in such circumstances. In our opinion this is not a loss
of benefits that the dependent reasonably expected to receive
from the deceased and as such should not be recoverable under
the Fatal Accidents Act 1976.
Do you have any views on the application of aggravated
damages, for these purposes, in Scotland?
19. We have no comments in respect of the
proposed amendments to the Reserve and Auxiliary Forces (Protection
of Civil Interests) Act 1951, Patents Act 1977 and Copyright,
Designs and Patent Act 1988.
Do you agree with the impact assessment on the
proposed reforms relating to the law of damages at Annex C?
20. We have not undertaken a detailed analysis
of the potential cost implications for Aviva. However, in the
assessment it assumes bereavement damages are only claimed in
50% of cases. This is not our experience, and we believe damages
are claimed in the majority of eligible cases. We anticipate that
the proposals will lead to an increase in claims costs which will
be passed on to our motor and liability policyholders.
Do you have any comments on the draft clauses
of the Bill relating to the setting of pre—and post-judgment
interest?
21. The current rate of pre-judgment interest
was set by the Lord Chancellor in 1993 at 8%. This is significantly
higher than investors receive on savings or current borrowing
charges. A link to an external rate such as the Bank of England
base rate to be reviewed on a regular basis would provide clarity
and certainty. Until further information is provided on the mechanism
for review and the rate to link the interest award, then it is
not possible to comment on the impact of the proposal. We believe
that this is a complicated area, which will require a further
more detailed impact assessment and consultation before proposals
are implemented. The aim of interest in personal injury claims
is to be compensatory not penal. We do not consider compound interest
could ever be justified in personal injury cases.
Do you agree with the impact assessment on the
proposed reforms relating to the setting of pre—and post-judgment
interest at Annex D?
22. See above.
Do you have any comments on the draft clauses
of the Bill in relation to the distribution of estates of deceased
persons?
23. No comment.
Do you agree with the Impact Assessment on the
proposed reforms relating to the law of succession at Annex E?
24. No comment.
Do you have any comments on the provisions of
the draft Bill relating to rights of appeal?
25. We have no comment on the provisions
of the bill in respect of the reforms proposed for appeals in
Barristers disciplinary hearings.
Do you agree with the impact assessment on the
proposed reforms relating rights of appeal at Annex F?
26. No comment.
March 2010
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