General Liability newsletter – May 2024

Welcome to the latest edition of our general liability newsletter. In this edition we look at the Personal Injury Discount rate, the Terrorism (Protection of Premises) Bill and the recent case of Williams-Henry v Associated British Ports you have any questions please get in contact with a member of the team.

Personal Injury Discount Rate in England & Wales, Scotland and Northern Ireland Updated

Following the introduction of the Civil Liability Act 2018, the Ministry of Justice must conduct reviews into the Personal Injury Discount Rate (PIDR) every five years. The PIDR is a percentage adjustment made to compensation awards for future losses in personal injury claims and it is intended to reflect the likely return on investment.

A review into the PIDR commenced in July 2024 and the result of the review was recently announced, with it being confirmed that the new rate will be +0.5% from 11 January 2025. The new rate brings England and Wales in line with Scotland and Northern Ireland (whose rates were increased in September 2024).

The next review is not expected to take place until 2029.

Comment and analysis

Whilst the rate largely falls in line with many market expectations, we anticipate the following impact:

• Strategic Settlement plans: Insurers will need to reassess their settlement strategies and possibly withdraw or revise previous offers based on the current minus 0.25% PIDR. This strategic adjustment is crucial to avoid over-compensation and manage risk effectively.

• PPOs – for claims involving longer tail future losses, claimants may look to breakdown compensatory awards and accept smaller retained lump sums with periodical payments for more heads of claim.

• Year end –with rate certainty for the foreseeable, insurers can now reserve with more confidence, making business planning easier. The announcement of the new rate should support claims professionals with year-end reviews, paving the way for greater precision as we move into 2025.

• Competitive / dynamic renewal conversations: Insurers may have increased confidence to adjust premiums in response to the reduced claims costs. Naturally, this will depend upon individual company & carrier appetites and risk profiles. Furthermore, as the PIDR has a market wide impact, the competitive environment cuts both ways!

• Financial Solidity: The positive PIDR reflects improved investment market conditions, perhaps encouraging insurers to expect better returns on funds they invest. This can enhance the financial stability of insurance companies by reducing the need for large reserves to cover future claims.

• Claims Inflation Mitigation: The new rate helps mitigate the impact of claims inflation, which has been driven by rising costs of living, wage inflation and medical expenses. This can free up funds for insurers to invest in other areas of their business.

Venues and clubs must provide greater protection to visitors and staff following the introduction of Terrorism (Protection of Premises) Bill 2024

In September, the Terrorism (Protection of Premises) Bill 2024 or 'Martyn's Law' as it is often referred to, was introduced to Parliament. The Bill was introduced following the Manchester Arena bombing in 2017 and it aims to provide further protection at publicly accessible venues to visitors and staff from terror attacks. Should the Bill pass, venues with capacity for over 200 will be required to implement stronger security checks and procedures.

Standard tier premises that hold 200-799 individuals will be tasked with developing clear procedures to reduce harm, such as training staff to lock doors, and identifying safe routes to cover. Enhanced tier premises with capacity for 800 or more will be required to comply with more stringent procedures, including the installation of monitoring systems or CCTV, and appointing a senior staff member to be responsible for compliance.  The Bill will establish a regulator to oversee compliance through a new function of the Security Industry Authority (SIA).

It is estimated that around 200,000 businesses will be affected by the new legislation, with costs of around £330 per year for smaller businesses, and around £5,000 per year for larger enterprises.

The SIA will seek to support, advise and guide businesses to implement the legislative requirements. In the event of serious and persistent cases of non-compliance, the regulator will have the power to take enforcement action. Smaller businesses are likely to face maximum fines of up to £10,000, and larger business could face fines of up to £18m. In the most serious cases of non-compliance, businesses could be shut down.

Comment and analysis

It is expected that this legislation could potentially take two years to become law. It is important that businesses complete preparatory steps by: ensuring that Directors and Officers understand the new enhanced duties, undertaking available training, and ensuring they allocate appropriate funds to be able to comply with the new procedures.

Williams-Henry v Associated British Ports [2024]

The Claimant issued an Occupiers Liability claim against Associated British Ports after falling from Aberavon Pier and suffering a severe brain injury. She alleged that the injury was caused due to a lack of safety railing. Following a pleading of contributory negligence, liability was apportioned two thirds to the Defendant and one third to the Claimant. Taking this into account, the judge found that the Claimant should be awarded £600,000 for her injuries.

The Defendant also put forward a case of fundamental dishonesty against the Claimant and served video surveillance and social media evidence in support. As such, the judge had to consider whether to dismiss the claim under s57(2) of the Criminal Justice and Courts Act 2015. Readers will appreciate that a fundamentally dishonest claim must be dismissed unless the court is satisfied that the Claimant would suffer substantial injustice. After considering the evidence, the judge dismissed the Claimant's claim with the Defendant's costs unenforceable against the Claimant up to the level of "honest" damages (£600,000). The Defendant's costs were less than this so could not be recovered from the Claimant.

Subsequently, the Defendant made an application for wasted costs against the Claimant's representatives on the grounds that the case should not have gone to trial but for their negligence and misconduct in relation to disclosure, advice on settlement, and inconsistencies within their witness statements.

The Defendant submitted that failing to disclose social media posts amounted to negligence and had disclosure been given, this would have led the Claimant's representatives to the conclusion that the facts being put forward by their client were not truthful. In response to this, the judge stated that the Claimant was not under a duty to disclose these, particularly given that they were not relevant until the disclosure of video surveillance by the Defendant. Furthermore, the Defendant did not specifically request these documents either, again demonstrating their lack of relevance to the parties at the time. As such, the judge did not consider this amounted to negligent conduct by the Claimant's representatives.

The Defendant further submitted that the Claimant's representatives did not advise their client properly in relation to settlement of the claim prior to trial. This too was dismissed by the judge on the grounds that the Claimant's representatives were acting on her instructions and that a claimant cannot be expected to immediately settle a good core claim, where they have at least some prospect of defeating the assertion of fundamental dishonesty.

The witness statements relied upon by the Claimant at trial were established to be prepared in poor practice and this did amount to unreasonable conduct. However, wasted costs order applications are not intended to be professional negligence actions and in any event the Claimant's solicitors had been handed "a large stick with which to beat the Claimant and that stick was used professionally and effectively". Therefore, the judge could not conclude that this had led to any wasted costs.

The judge further dismissed assertions of improper conduct by the Claimant's representatives in relation to the termination of their CFA with their client on the grounds that it was a "human and commercial" decision and as "not a matter of professional regulation or for the Court or the Applicant to comment upon or criticise".

The wasted costs application was ultimately dismissed for failing to prove what wasted costs were incurred including the causal link between the Claimant's representative's conduct and any wasted costs.

Comment and analysis

This judgment highlights the importance of a causal link between a Respondent's actions and the costs that have allegedly been wasted. Here, the judge comments on a negligent witness statement, and the potential for bringing a professional negligence claim in relation to this. However, they had failed to show the court that this wasted any costs, particularly when they had in fact benefited from the poorly drafted statement at trial.

Throughout the judgment, the court were keen to provide protection to claimant solicitors in situations where they are acting on their client's instructions in good faith. Naturally, if they become aware of any dishonesty by their clients, they must take the appropriate action. However, in this case the relevance of certain facts only came to light late on in proceedings, and the solicitors could not have been expected to have had this knowledge earlier.

The fact that the Respondent did not waive privilege, as they are entitled to do, made matters difficult for the Applicant and therefore any solicitors considering a wasted costs application should consider whether they have adequate evidence available to prove causation.