Keeping it real?

Professionals will be hoping that the Compensation Act 2006 will put paid to them being pursued by spurious claims, report Nik Carle and Peter Causton

At the same time as risky activities are on the up, so are the claims that we are living in a compensation culture. With the Compensation Act 2006 having just been introduced, could the rising tide of speculative claims be stemmed and the end of an era be nigh? And if so, what effect might this have on claims against professionals?The act sees regulation of claims management companies for the first time and also includes two important provisions relating to admission of liability and the mitigation of the deterrent effect of potential liability.

It may offer some solace to providers of adventure activities, such as the annual Cooper’s Hill cheese-rolling competition (a downhill race after an 8lb Double Gloucester) – assuming that this can be defined as a ‘desirable activity’. It may also assist those involved in activities such as mountaineering and kite-surfing and enable local authorities to review their policies on the safety of conker fights, window boxes and gravestones. No doubt Parliament had in mind cases involving school trips and the emergency services; however, professional people undertake activities that are arguably more ‘desirable’ to society than such adventurous ones and also have a claim to the act’s protection.

Greater professional latitudeThe act provides in Part 1 that: “A Court considering a claim in negligence or breach of statutory duty may, in determining whether the defendant should have taken particular steps to meet a standard of care (whether by taking precautions against a risk or otherwise), have regard to whether a requirement to take those steps might, firstly, prevent a desirable activity from being undertaken at all, to a particular extent or in a particular way; or, secondly, discourage persons from undertaking functions in connection with a desirable activity.”

The explanatory notes clarify that the act alters neither the standard of care nor the circumstances in which a duty will be owed. Instead it reflects the existing law and the approach taken by the courts as indicated in recent judgments.

However, the courts can now take into account whether requiring particular steps would impede a ‘desirable activity’ from taking place, ensuring it is not prevented owing to a fear of litigation or risk-adverse behaviour. The clear intention of the act is to put an end to speculative claims. Importantly, consideration by the courts is by no means mandatory, but nevertheless the existence of the act may persuade the courts to adopt a more cautious approach to such claims.

The provision could be interpreted as an expansion of the common law ‘policy’ principle already applied in negligence claims, putting the brake on the ever-expanding duties imposed on professionals. There are many circumstances where fear of litigation could impede a professional and/or discourage them from proceeding.

Fewer spurious claimsAn obvious application of the act is in the field of clinical negligence, when, for example, a surgeon undertakes a revolutionary new treatment or a doctor prescribes a new drug. It might be possible to argue that the benefits of the development of science justifies protection from spurious claims. Similarly, expert witnesses may argue that there should be no further erosion of their immunity from suit.

Solicitors acting on a pro bono basis, or for a low fee, might argue that the risk of claims would dissuade them from undertaking this work, which is clearly in the public interest. They might also turn to the act to support them in cases similar to the recent case of Regent Leisuretime v Skerrett (2006), where the court refused to impose a duty on a solicitor to consider all aspects of a client’s interests, stressing the importance of bearing in mind the limits of what would be expected of a solicitor, who was not bound to know all the law.

Barristers, in turn, might be able to argue that their advocacy activities are desirable in the interests of justice and claims should be discouraged in order for them to pursue their clients’ cases fearlessly in court and to allow them latitude to make decisions on settlement based upon their experience.

Of course, it would be unwise to rely upon the act as a defence until it has been tested in court, but there remains plenty of scope for arguments to be deployed based upon the act.

Sorry state of affairsPart 1 (2) of the act provides 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”. This is intended to be a restatement of the common law, in that saying sorry does not amount to admitting liability, although this goes further to include an offer of ‘other redress’.

However, this will come as a surprise to those (mainly insurers) keen to prevent those they insure from making statements that could be interpreted as an admission of liability. In some cases the policy wording states that this would justify non-payment (subject to minimum terms or special conditions, where prejudice may come into play).

On this basis, should a solicitor on meeting with a client apologise for a mistake and offer to rectify it, this should not be interpreted as an admission. However, from the lay client’s perspective, this is exactly what it appears to be – otherwise why issue the apology?At present, Part 14.1.5 of the Civil Procedure Rules (CPR) states that a pre-action admission can be withdrawn anyway, but in practice the court may exercise its powers to strike out if there is clearly no defence to liability, or enter summary judgment. However, it still remains unwise to admit liability, or from a tactical point of view to say sorry.

It appears that, until the act is tested in court, it would be somewhat unwise to add anything further to an apology that could be misinterpreted as an admission if you are not making an admission of liability. However, the difficulty in this is that very few claimants will be satisfied with a simple apology when they require financial compensation. This is likely to be especially true should an 8lb rolling cheese flatten you while you are taking the air in the Gloucestershire countryside. On this basis, it is unlikely that the act will have a significant impact on our current compensation culture.

Wider document accessCPR Part 5.4(C)1a applies to statements of case filed after 2 October 2006. It replaces the old rule, whereby it was possible to search only the register of claims held in the High Court at the Royal Courts of Justice and replaces it with a much wider jurisdiction for non-parties to access court documents, including statements of case and judgments, as well as any other filed document. The only option open to a party (or person identified in a statement of case) to prevent this happening is to apply to the court not to allow non-parties to access the documents, or to edit them.

Practitioners should be aware that, if a client is not advised that statements of case and other filed documents are now essentially public documents, they might face claims for negligence or complaints if the information disclosed is damaging to the client’s interests.

Nik Carle is a partner and Peter Causton is an assistant at Browne Jacobson