LEVEL 4 - UNIT 7 INTRODUCTORY CONSIDERATIONS FOR PERSONAL INJURY LAWYERS SUGGESTED ANSWERS - JUNE 2015 Note to Candidates and Tutors: The purpose of the suggested answers is to provide students and tutors with guidance as to the key points students should have included in their answers to the June 2015 examinations. The suggested answers do not for all questions set out all the points which students may have included in their responses to the questions. Students will have received credit, where applicable, for other points not addressed by the suggested answers. Students and tutors should review the suggested answers in conjunction with the question papers and the Chief Examiners reports which provide feedback on student performance in the examination. Question 1 Limitation Act 1980 (LA 1980) defines personal injury as an impairment of a person s physical or mental condition. Applying that definition to Mrs Khassogi s injuries set out in the letter from the General Practitioner, they are all covered. The LA 1980 definition is also used in CPR 2.3. (i) A scar with an overgrowth of dense fibrous tissue outside the borders of the original wound is a keloid scar. It can be surgically removed but often regrows. A scar that stays within the borders of the original wound and which fades with age is a hypertrophic scar. It can be surgically removed and will not regrow. (ii) The General Practitioner has referred to scarring on both knees and stated that he is unable to say if the scars would benefit from surgical revision. This issue needs to be addressed by a Plastic Surgeon. The General Practitioner has also referred to a complaint about a heart murmur and has recommended that it is investigated, as possibly the accident may have caused symptoms to reoccur. This will need to be done by a Cardiologist. CFA s were not introduced by the Supply of Goods and Services Act 1982. Since 1 April 2013, the success fee cannot now be recovered from the losing party and so will be paid by Mrs Khassogi in the event that the claim is successful. Page 1 of 5
Since 1 April 2013, the success fee has been capped in a personal injury claim and cannot exceed 25% of the damages awarded for: Pain suffering and loss of amenity (PSLA); Past pecuniary loss that has been incurred as a result of the accident. It is wrong to state that the cap is 30% and that it applies to future losses as such losses are specifically excluded by Article 4 of the Conditional Fee Agreement Order 2013. Since 1 April 2013, Qualified One Way Costs Shifting (or QOCS) means the losing party is not normally liable to pay the winning party s costs and so Mrs Khassogi does not need insurance to protect her from this event. However, s.46 LASPOA 2012, makes it clear that the cost of the insurance premium will no longer be recoverable as part of the costs order from the losing party. The insurance premium will be payable by the client. Finally, neither LASPOA 2012 nor the CFA Order 2013, changed the requirements laid down in s.58(3) Courts and Legal Services Act 1990 (CLSA) that a CFA does need to be in writing. The letter to Mrs Khassogi contains a number of errors and if not corrected may result in the firm not being paid for the work they have done, as well as being a breach of the SRA Code of Conduct 2011. Question 2 Legal Expenses Insurance (LEI) is also known as Before the Event Insurance (BTE). It can be taken out by those wishing to protect themselves against potential litigation costs. It is generally paid on an annual basis to an insurance company. It may be attached to many forms of insurance such as car, contents or house insurance by insurers. Where the client has the benefit of a LEI insurance policy, the presumption is that they will use it. There is no need to enter into a CFA because LEI insurance generally covers both sides costs. The level and type of cover available under the LEI policy should be checked to make sure it is suitable. This LEI policy has a limit of indemnity of 50,000, which should be sufficient to cover a modest case such as this one. Document 2 refers to damages of 5,000 and costs of 4,000. Only if the cover is obviously insufficient, would it be reasonable to enter into a CFA. In Sarwar v Alam (2001) the Claimant had taken out an After the Event Insurance (ATE) policy when there was the opportunity to benefit from an existing LEI policy. The Court of Appeal said that in the ordinary course of events a claimant making a straightforward modest claim will be expected to use the LEI policy. The Insurance Companies (Legal Expenses Insurance) Regs 1990 apply to a person holding an LEI contract and under reg 6 where recourse is had to a lawyer to represent the interests of the insured in any proceedings the claimant is free to choose his lawyer. Page 2 of 5
Question 3 This is interpreted by insurers to be after proceedings have been issued. So the effect of this is that, if the client wants the LEI to be used, she must use the insured s panel solicitor until proceedings have started. Employers are responsible for the health and safety of their employees while they are at work. This is governed by Employers Liability (Compensation Insurance) Act 1969. Employers liability insurance is compulsory. This differs from public liability insurance, which is voluntary and covers an employer for claims made by members of the public or other businesses. Employers must have liability insurance against liability for bodily injury and disease, and they can be fined if they do not hold a current employers' liability insurance policy. The Employers Liability Tracing Office (ELTO) is an independent body set up to provide claimants and their representatives with quick and easy access to a database of employers liability policies through an online enquiry facility. This should enable any insurance policy in place to be traced. The Third Parties (Rights against Insurers Act) 1930 ensures that, where the insured (Marchants Sewing Machines Ltd) incurs liability to a third party (Mrs Austin) but is declared insolvent, the insurance proceeds will be protected from the insured's insolvency. Under the 1930 Act procedure, the insured's rights are automatically transferred to the third party upon the occurrence of specified insolvency events. Once transferred, the third party can sue the insurer directly. The 1930 Act requires Mrs Austin to first issue proceedings to establish the existence and amount of the insured's liability before she can issue proceedings against the insurer itself (i.e. an admission from the defendant or judgment obtained). In Post Office v Norwich Union Fire Insurance Society Ltd (1967), liability under an indemnity policy does not accrue unless and until the existence and amount of the liability to relevant third parties has first been established. The key participants in this personal injury claim with reference to Document 3 are: The Claimant who has been injured at work and wants justice and compensation. The Claimants lawyer conducts the case and has experience of dealing with defendants. They will know the law that applies to employer s liability claims and that the claimant bears the burden of proof. The Defendant is a company and the Managing Director has spoken to Mrs Austin on the telephone. He is unwilling to accept that Marchants Sewing Machines Ltd is at fault and thinks the compensation culture is to blame. He is likely to instruct the company s solicitors to fight the case. Page 3 of 5
Question 4 The Defendant s insurers, once traced, will handle the claim on behalf of the defendant in conjunction with the defendant company s solicitors. They will pay out if they believe that the company is liable if there is no reason why they should not indemnify the company, as there will be a clause in the employer s liability policy that allows it to act on the defendant company s behalf. The Defendant s lawyer will want to be sure of the extent of the injury and liability, and will consider potential issues with limitation and causation before advising on settlement. The medical experts for each side must be independent or impartial even though they are instructed by one side or the other. One of their roles is to address the issue of causation and to enable the solicitors to assess the extent of the injury and the quantum of the claim. Mr Singh must be advised that proceedings must be issued urgently. Under s.11 Limitation Act 1980 (LA 1980), where a claimant claims damages for negligence, and that claim includes a claim for personal injuries, there is a primary limitation period of three years from the likely date of injury (here 20 June 2011) to issue proceedings or from the likely date of knowledge (here 20 June 2011 or 8 June 2012). If the claimant does not issue proceedings within the primary limitation period, the claim may be statute-barred. Section 33 of the LA 1980 gives the court a wide and unfettered discretion to disapply the three-year limitation period if it appears to the court that it would be equitable to allow an action to proceed. As Mr Singh s painful knee occurred over a period of time following a return to work after his left knee replacement, there is some doubt as to when he would have had knowledge. The earliest date would be 20 June 2011, when he noticed that operating the clutch caused him pain, swelling and discomfort, although there is a window between 20 June 2011 and 8 June 2012, when the claimant had to give up driving the coach, when it might have been reasonable for him to seek further expert opinion over that of his GP. His GP told him that the pain was due to the knee replacement and not the driving. It was not until 18 July 2012 when he saw the consultant that he had actual knowledge, in which case it is arguable that the limitation period would not expire until 18 July 2015. The court will look at a number of factors including: prejudice to the parties; the length and reasons for the delay. The claimant can rely on B v Ministry of Defence (2010): the date of knowledge is not the date on which the Claimant knows he has a definitive claim but the date on which he believes, with more than reasonable suspicion, that he could have a potential claim. Mr. Singh states at para 6 of his letter: I was slightly suspicious that the driving might have caused my knee problem but I was also thinking it might have been the knee replacement itself. As this is not reasonable suspicion, it would not be sufficient in order to establish a date of knowledge at that point in time. Page 4 of 5
mere suspicion is not enough. Actual knowledge is from 18 July 2012 so arguably proceedings issued on 4 July 2015 are within the primary limitation period; the effect of any delay on the cogency of the evidence (medical evidence is still available, only likely to be claimant and defendant as witnesses, unlikely that their recollection will be affected by the delay); what steps it was reasonable for the claimant to have taken to obtain medical advice about his condition what steps it was reasonable for the claimant to have taken having received medical advice e.g. to seek legal or other expert advice. It might be difficult for Mr Singh to argue that it was reasonable not to have sought legal advice until June 2015, having received the medical expert's opinion in July 2012. The enforceability of a DBA is governed by the Damages-Based Agreements Regulations 2013 (DBAR 2013). To be enforceable the DBA must be in writing. It must also specify the claim to which the agreement relates (Reg 3 ); the circumstances in which the costs are payable; and the reason for setting the amount of the payment at the level agreed (Reg 3 ). The percentage of the amount the lawyer can claim as costs (including VAT) must not be more than 25% of the damages awarded (Reg 4). Damages awarded include PSLA and past pecuniary loss but not future loss It appears that Mr Singh was not to blame for the accident and therefore has a claim in negligence against the insured driver. He should bring a claim against the insurer. Regulation 3 of the European Communities (Rights against Insurers) Regulations 2002, provides that an insurer shall be directly liable to an entitled party (i.e. any resident of a member state) if the entitled party has a cause of action arising out of an accident, and has a cause of action against an insured person in tort. Page 5 of 5