Welcome to February s 2017 edition of Disease-i; the publication for busy disease practitioners!

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1 Welcome to February s 2017 edition of Disease-i; the publication for busy disease practitioners! We always enjoy hearing from our readers, so if you have any suggestions for topics or experiences to share, please us at jim.byard@weightmans.com. The market place Exploring Personal Injury Reform Announced Discount Rate lowered to minus 0.75% Fixed Costs Regime CMC Review Case law update Covering Time exposure apportionment preferred to dose based apportionment for Pleural Thickening David Kearns v Delta Steeplejacks Ltd [2017] EWHC 149 (QB) Company liable to indemnify English Electric Co Ltd v Alstom UK [2016] EWCA Civ 1314 Relief from sanctions was granted for a company's failure to file its costs budget on time Intellimedia Systems Ltd v Richards & Others (Ch D (Warren J)) 01/02/2017 Damages awarded in living mesothelioma case but assessment adjourned until after death Andreou v S Booth Horrocks and Sons Ltd [2017] EWHC 174 (QB) On the horizon Looking at Expenses and Funding of Civil Litigation (Scotland) Bill Automatic Strike out for cases where trial fees are unpaid Popping balloons as loud as shotguns

2 The market place Personal Injury Reform Announced On 23 February 2017 the Ministry of Justice ( MOJ ) issued its response to the swift 7 week consultation it held on reforming the soft tissue injury claims process. As anticipated, the MOJ has been tough on whiplash RTA claims but has made some concessions, implementing a tariff for damages for whiplash injuries sustained following a road traffic accident as opposed to an outright ban. All whiplash injuries lasting less than 24 months will fall within the new increased small claims track ( SCT ) limit of 5,000, although it is not currently clear what this will mean in terms of recoverable costs. The SCT for all other personal injury claims has also increased but only to 2,000 meaning that the overwhelming majority of disease claims will remain unaffected by these reforms. The increase to the SCT will be implemented via statutory instrument; however the other reforms surrounding whiplash claims require primary legislation and will be contained within the Prisons and Courts Reform Bill. Likely implementation for this is October What is not yet known is whether the MOJ will implement the SCT and the whiplash reforms at the same time. The MOJ is also working with Claims Portal Limited and MedCo to develop mechanisms to assist litigants in person to bring their claim directly due to the rise in the SCT and will release their views in due course. The key features of the reforms are: 1. an increase to the SCT in RTA personal injury claims to 5,000; and 2. an increase to the SCT in all other personal injury claims to 2,000; and 3. a tariff of fixed compensation for pain, suffering and loss of amenity for whiplash claims (defined as neck and upper torso only) with a duration of 0-24 months; and 4. an ability for the judiciary to decrease the tariff in the event of contributory negligence or to increase the tariff by up to 20% in exceptional circumstances; and 5. a ban on offering, requesting, and accepting pre-med offers. Discount Rate lowered to minus 0.75% On 27 February 2017 the Lord Chancellor and Secretary of State for Justice, Liz Truss, announced to the London Stock Market that she would be reducing the discount rate from 2.5% to minus 0.75%. The new rate will apply from 20 March The discount rate is the mechanism by which damages paid to seriously injured individuals in relation to future losses are adjusted to reflect the fact of early receipt. The courts apply the discount rate to damages in order to take account of (a) the possibility that the claimant may die sooner than anticipated, and (b) the fact that the claimant will receive the damages in advance of incurring the expenditure to which they relate allowing the claimant the opportunity to invest the income. The discount rate has remained at 2.5% since it was last varied in The Lord Chancellor is obliged to keep the discount rate under review in line with the provisions of s.1 Damages Act 1996 and, in accordance with this duty, Liz Truss announced her decision to reduce the rate to minus 0.75%. This reduction will lead to significantly higher damages awards where claims for future loss are advanced and will also directly impact the government in respect of litigation against it which is predominantly funded by the government itself. The move is significant, and insurers are already suggesting that this could cost the industry 4.5 billion in additional claims spend. By way of example, a catastrophic claim that today would settle for 9m, could now settle for over 20m when the new discount rate comes into force.

3 The announcement is likely to eradicate, in one fell swoop, any potential savings which would have been passed onto consumers following the wider personal injury reforms. On current claims where future losses are sought, claims handlers should review the adequacy of reserves as well as existing offers. The potential increase in the value of these claims now may also warrant looking at handling authority matrices to ensure that claims which will now inevitably be worth more are handled by the correct people. However, there could be light at the end of the tunnel. On 28 February 2017, CEO s from most major insurers met with the Chancellor of the Exchequer to discuss the situation. The government as a result has promised to urgently consult on both the rate and the method used to set it. What remains to be seen is whether the implementation date for the new rate will be put on hold pending the outcome of the urgent consultation. Fixed Costs Regime Lord Justice Jackson is continuing his review of fixed litigation costs and will be attending meetings across the country with interested parties. The meetings will be held in Leeds, Manchester, London, Birmingham and Cardiff. Lord Justice Jackson has however made it clear that he is seeking constructive input rather than advocating to leave the costs system as it is. On a related note, Jeremy Hunt, Secretary of State for Health, has announced details of the proposed fixed costs regime for clinical negligence cases which are now subject to public consultation until the end of April The Department of Health said the scheme will be mandatory for all claims worth up to 25,000 and may give some indication of the levels of fixed fees Lord Justice Jackson will recommend at the end of his review. CMC Review Legislation to transfer regulation of Claims Management Companies ( CMCs ) from the MOJ to the Financial Conduct Authority ( FCA ) is anticipated to be tabled this Parliamentary term. The FCA is, in the meantime, reported to have begun work on a CMC handbook as a first step towards assuming its regulatory responsibilities and is expected to consult on the regulatory framework shortly. The FCA has a lot of work to do, especially as it has now been given the task of policing the ban on pre-med offers in whiplash claims. With solicitors likely to pull out of whiplash claims, CMC s may well fill the void, it is therefore paramount that we get the new regulatory regime right first time. Case law update David Kearns v Delta Steeplejacks Ltd [2017] EWHC 149 (QB) Time exposure apportionment preferred to dose based apportionment for Pleural Thickening The claimant pursued the defendant for damages for Pleural Thickening which he alleged was sustained as a result of exposure to asbestos during his employment with the defendant at various periods between 1981 and 1991 as well as with one other employer. The claimant sought apportionment of damages on a time exposed basis which equated to 39% of the total whereas the defendant sought a dose related apportionment which would have equated to around 15%. On the issue of apportionment, the court held that without details of exposure from the other employer a time-exposure based apportionment was the most appropriate. Causation was also in issue. Whilst it was agreed the claimant had a respiratory disability of 60%, 40% of which was due to Chronic Obstructive Pulmonary Disease caused by smoking and 20% due to diffuse pleural thickening, the medical experts disagreed about the cause of the diffuse pleural thickening in one lung. It may have been caused by asbestos or by a significant trauma in following a fall The medical experts also disagreed about the sufficiency of the evidence to diagnose diffuse asbestos related pleural thickening in the other lung.

4 As it was accepted that the claimant was exposed to high levels of asbestos during his employment with the defendant, the court accepted that the diffuse pleural thickening in the right lung was a result of asbestos exposure as opposed to the 1999 trauma. However, in considering all the evidence the court concluded that there was insufficient evidence of diffuse pleural thickening in the left lung and so the changes to that lung did not amount to an actionable injury. English Electric Co Ltd v Alstom UK [2016] EWCA Civ 1314 Company liable to indemnify The Court of Appeal upheld a decision that a company was liable to indemnify another company in respect of a damages claim made by a former employee's widow following his death from mesothelioma. The claimant had worked for Associated Electrical Industries Limited ( AEI ) between 1956 and His widow successfully brought a claim against AEI and was awarded damages. The issue was then whether liability for those damages could be passed down a contractual chain of agreements which had been made for the sale of AEI s business that had been sold to English Electric Co Ltd ( EEC ) in EEC had agreed to indemnify AEI against any claims arising from 1 April In 1989, EEC sold the business to Alstom UK ( AUK ). At first instance it was held that EEC was liable in relation to the widow's claim. AUK had already accepted that if EEC was liable to indemnify AEI in respect of the claim, then it was liable to indemnify EEC pursuant to an indemnity provision in the 1989 sale agreement. As such, AUK brought the appeal to determine whether the liabilities had passed from AEI to EEC. The Court of Appeal held that liability for damages could be passed down the contractual chain of agreements which had been made for the sale and purchase of the business between AEI and EEC and EEC and AUK. The Appeal was therefore dismissed. Intellimedia Systems Ltd v Richards & Others (Ch D (Warren J)) 01/02/2017 Relief from sanctions was granted for a company's failure to file its costs budget on time The claimant had omitted to file a costs budget within the required time. It was advised that this had been due to the claimant s solicitor falling ill. However the defendant argued that this was not a sufficient reason and that someone ought to have taken responsibility in such circumstances. An application for relief from sanctions was therefore made and contested by the defendant. The court held that although the delay in filing the costs budget had disrupted the parties' case management conference, imposing a sanction to limit the claimant s costs of the action to court fees would be disproportionate. The claimant was therefore granted relief but ordered to pay the costs of the application hearing on an indemnity basis. Andreou v S Booth Horrocks and Sons Ltd [2017] EWHC 174 (QB) Damages awarded in living mesothelioma case but assessment adjourned until after death The Claimant alleged exposure to asbestos whilst employed as a heating and plumbing engineer with the Defendant in the 1960 s. Liability was admitted and the matter proceeded on the issue of quantum only. The court assessed various heads of damage claimed but adjourned until after his death its assessment of the value of the services the claimant would have provided to his wife but for the disease, in respect of a hotel and rental properties they owned as well as acres of land at their residence. The claimant essentially sought recovery for loss of services during the lost years which is a dependency claim and not recoverable in a living claim. The defendant argued that on this basis it should be dismissed. Giving her judgment, HHJ Walden-Smith held: it is accepted by the claimant that these are matters that properly will need to be dealt with post mortem if there is not agreement between the parties. There has not been agreement between the parties and while it is said by the defendant

5 that the claimant has made an election to bring a claim now and that therefore this matter should be dealt with now and, as it is not something that can be recovered now, the claim should be dismissed. I do not agree with that stance. This is a proper claim that will be made in due course. In the circumstances, while it is clear from the authorities that this is not something that this court can order, given that it has not been agreed between the parties, I will adjourn this part of the claim in order that it can be dealt with post mortem. It would not be right in my judgment for the claimant or the claimant s estate or his widow in due course not to be able to make a claim for something to which he is entitled simply by reason of it having been brought into these proceedings. This discrete matter will therefore be adjourned. On the horizon Expenses and Funding of Civil Litigation (Scotland) Bill The Scottish Government has proposed this bill as part of its 2016/17 legislative programme. The bill s aim is to make civil justice more accessible and affordable. The following key measures are likely to be introduced: 1. qualified one-way costs shifting (QOCS) for personal injury cases; 2. damages-based agreements which will be enforceable by solicitors; and 3. sliding caps for success fee agreements in personal injury and other civil actions. Automatic Strike out for cases where trial fees are unpaid The 88th amendments to the Civil Procedure Rules ( CPR ) come into force from 6 March This will introduce new rules at CPR 3.7A1 and CPR 3.7AA relating to the sanctions for non payment of trial fees. Where a claimant has not paid the trial fee specified in the fee notice on or before the trial fee payment date the claim will be automatically struck out and, unless the court orders otherwise, the claimant will be liable for costs which the defendant has incurred. Any counterclaim will still stand. However, there is a new similar provision for a counterclaim trial fee, and if this is not paid in accordance with the fee notice, the counterclaim will automatically be struck out. Popping balloons as loud as shotguns Audiologists at the University of Alberta in Canada have discovered that popping an over-inflated balloon can generate noise of 168dB. This is louder than firing a shotgun, an activity in which operators should be using ear defendants given the known risk of noise induced hearing loss from firing guns. Their research, published in the Canadian Audiologist, is to raise awareness of everyday noises that can cause cumulative hearing losses. Something to think about at the next kids party you attend! For further information about Weightmans LLP or to discuss any of the issues in this newsletter, please contact: Jim Byard, Partner, Head of Disease, jim.byard@weightmans.com or call on Joanna-Louise Hector, Associate, joanna-louise.hector@weightmans.com or call on Weightmans LLP February 2017

6 This update does not attempt to provide a full analysis of those matters with which it deals and is provided for general information purposes only. This update is not intended to constitute legal advice and should not be treated as a substitute for legal advice. Weightmans accepts no responsibility for any loss, which may arise from reliance on the information in this update. The copyright in this update is owned by Weightmans 2017 Data Protection Act Pursuant to the Data Protection Act 1998, your name may be retained on our marketing database. The database enables us to select contacts to receive a variety of marketing materials including our legal update service, newsletters and invites to seminars and events. It details your name, address, telephone, fax, , website, mailing requirements and other comments if any. Please ensure you update our marketing team with any changes. You have the right to correct any data that relates to you. You should contact James Holman, our Data Protection Officer in writing, at 100 Old Hall Street Liverpool L3 9QJ.