Triumph or tragedy?

The UK government states that ‘it is committed to tackling perceptions of a compensation culture and to improving the compensation system for valid claims’. Part of its approach is to ‘tackle perceptions that can lead to a disproportionate fear of litigation and risk-averse behaviour’. One of the steps taken to date, as part of that approach, was the Compensation Act.

Compensation culture?

The late 1990s saw the evolution of conditional fee agreements and the removal of legal aid for all but a few personal injury claims. Claims management companies stepped into the void to provide funding for claims. A compensation culture appeared to be developing, and concern about it led to the government commissioning a report from the Better Regulation Task Force. Better Routes to Redress was published in May 2004.

The report concluded that ‘what is not right is that some people should be led to believe that they can absolve themselves from any personal responsibility for their actions and then expect someone else to pick up the pieces when something goes wrong, regardless of whose fault it was’.

The impact of a compensation culture (real or perceived) was said to include the following.

• Insurance premiums rise, to the extent that premiums are unaffordable, and an event or activity is cancelled, or an organisation no longer exists.

• Money and resources are diverted into risk management unnecessarily.

• Unnecessary and costly precautions are taken.

• Risk-adverse behaviour seeps into daily life, inhibiting risk taking, individual freedoms and social benefits, especially in the context of volunteering and sporting activities.

• People believe that they are at a heightened risk of being unfairly sued.

• There is less innovation, natural creativity and enterprise.

Tomlinson v Congleton Borough Council

Some of these factors were seen in the case of Tomlinson v Congleton Borough Council which progressed to the House of Lords, with all the consequent expense. Tomlinson, an 18 year old who dived in to the shallow water of a lake owned by Congleton Borough Council (CBC), was rendered tetraplegic when he struck his head on the bottom of the lake. He sued CBC, which owned and managed the lake as a public amenity, alleging it had breached its duty to him under the Occupiers Liability Acts and in negligence. At first instance and in the Court of Appeal Tomlinson succeeded, subject to contributory negligence, with the court holding that CBC should have destroyed the sandy beaches adjoining the lake so that people could not swim in it.

“Sorry is no longer the hardest word

The House of Lords disagreed. Lord Hoffman noted that no consideration had been given to the social value of the activities which would be prohibited if the beaches were removed. The question of whether people should accept responsibility for the risks that they chose to run had to be considered. As Lord Hobhouse stated: “…it is not, and should never be, the policy of the law to require the protection of the foolhardy or reckless few to deprive or interfere with the enjoyment by the remainder of society, of the liberties and amenities to which they are rightly entitled … the pursuit of an unrestrained culture of blame and compensation has many evil consequences, and one is certainly the interference with the liberty of the citizen.”

Thus the Compensation Bill was introduced in November 2005, with the then Prime Minister commenting in the introduction that: “the Bill will … clarify the existing common law on negligence to make clear that there is no liability in negligence for untoward incidents that could be avoided by taking reasonable care or exercising reasonable skill. Simple guidelines should be issued. Compliance should avoid legal action. This … will also reduce risk-adverse behaviour.”

The Act

The Act received Royal Assent on 25 July 2006. It has four elements, of which those relevant to this article are standard of care and apologies.

Part 1 states that: ‘A court considering a claim in negligence or statutory duty may, in determining whether a 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'

And, regarding apologies, offers of treatment or other redress, it states that: ‘…an apology, an offer of treatment or other redress, shall not of itself amount to an admission of negligence or breach of statutory duty’.

Sections 1 and 2 of Part 1 do not change existing law. The apology section confirms that it is possible for people to say sorry or to make some other gesture without that being evidence of there being some liability on their part. Sorry is no longer the hardest word.

Desirable activity

In reality, the first section of Part 1, and the introduction of the concept of a desirable activity, is the hardest section of the Act to explain and to apply. When the Bill was passing through the House of Lords there was much debate about what the phrase 'desirable activity' means. It is not found in any other legislation or case law. In Tomlinson the social value of activities were discussed. ‘Desirable activity’ was chosen by the Government specifically because it was ‘unhindered and unconstrained by previous definition’.

How, therefore, should it be applied and used in everyday life? The section applies to breach of duty in the context of negligence or statutory duty where there is a standard of care and there is a desirable activity (or arguably facility). Hence it does not apply where there is an issue of strict liability or such other statutory duty in which a standard of care does not arise.

The section is not limited just to personal injury claims. However, the personal injury arena is where, to date, it has mostly been considered. Within that context it is unlikely that a court would apply it to a claim made by an employee as a result of injury sustained at or through work. It is also unlikely that the section would be applied where an injury was to a child, certainly not to a young child. Given that one of the drivers behind the Act was the issue of schools cancelling trips away, it seems somewhat ironic that it would be difficult to rely on the Act if an accident did occur on a school trip.

“It remains an elusive and untested Act

Application of the section is discretionary: the court ‘may have regard’. Thus there is no certainty that, even if a defendant has behaved in a way which he believes complies with the Act, he will be able to rely on section 1.

The section is not meant as a new defence for defendants to escape liability. A defendant must still show what steps he took to ensure the safety of those participating in or using the desirable activity or facility. The section looks at the breach, that is, how the standard of care should be applied, and not the existence of the duty itself. The rationale is that a defendant should act in such a manner as to ensure safety, but bearing in mind what they are trying to achieve. There is a stage when the standard of care has been met, even though in theory further steps could have been taken. Hence, in Tomlinson, CBC had posted signs saying 'No Swimming' and employed wardens to patrol the park and advise people they could not swim. By so acting they were not in breach of the standard of care and were not required to have gone one step further and also remove the beaches, which would have been the ultimate deterrent.

Over a year has passed since the Act came into force and there has been no definitive guidance from the courts as to its application. The Act has certainly appeared in some pleadings but there has been no significant judicial comment on its application. Thus it remains an elusive and untested Act.

The maypole case

The case of Cole v Davies-Gilbert & Others this May received much media attention and was hailed as a victory for common sense and a backlash to the creeping compensation culture. The case involved an injury caused when the claimant fell while crossing a village green. Key issues were whether the fall was into the hole previously used for the maypole to be erected at the village fair, and, if so, what had happened to the hole after the fair took place. The case progressed to the Court of Appeal. Hence, as with Tomlinson, extensive costs were expended by all parties.

Despite all the publicity, the judgment does not mention the Act or refer to a 'desirable activity'. The significance of the case comes from two of the judges' comments.

Lord Justice Scott Baker noted that “accidents happen” and they do not have to have been caused by the fault of any party. Consideration had to be given to reasonableness, as if a higher standard of care was applied then “there would be no fetes, no maypole dancing and none of the activities … associated with the English village green for fear of what might conceivably go wrong.”

Sir Igor Judge, in effusive praise of the idealised life of an English village, considered that the annual maypole celebration brought the village community together and on such days “general happiness and good fellowship abound.” He considered that the village green had been made safe “by people in the village taking ordinary sensible precautions.” In that sense the judgment does echo the intention of Section 1, namely to allow activities which are desirable and where safe precautions are taken, not to be changed or cancelled because of fear of litigation.

Practically, therefore, the benefits if any of the Act remain unclear. If it was meant to be a shot across the bow of unmeritorious claims and prevent them being brought at all, it is unlikely to succeed. The economics of many minor claims will not merit proceeding to the Court of Appeal or House of Lords. Yet it is those minor claims which collectively cost a significant sum and need to be challenged. Risk must be well managed and consideration always given to the implications of any activity or facility. But accidents will still happen. If they arise in

• the context of a desirable activity

• and if the defendant can show that it had taken steps to meet the standard of care

• and if doing more would have prevented the activity or meant the facility closing

then there may be a defence under the Act.

Paula Jefferson is a partner in the injury risk group at law firm, Beachcroft LLP, www.beachcroft.co.uk