General liability

In this chapter of our Annual Insurance Review 2019, we look at the main developments in 2018 and expected issues in 2019 with regards to general liability.

Key developments in 2018

"Fundamental dishonesty" has remained in the news.

In London Organising Committee for the Olympic and Paralympic Games v Sinfield, Mr Justice Knowles ruled that a volunteer injured while working at the 2012 Olympic Games was fundamentally dishonest in exaggerating the costs of gardening and as a result dismissed his entire claim.

At first instance, Mr Recorder Widdup found the claimant had dishonestly created false invoices totaling nearly £15,000 but held that this dishonesty did not contaminate the entire claim and awarded the claimant £27,750 in damages. Overturning this decision and applying section 57 of the Criminal Justice and Courts Act 2015, Mr Justice Knowles dismissed the claim stating "A Claimant should be found to be fundamentally dishonest within the meaning of section 57(1)(b) if the Defendant proves on a balance of probabilities that the Claimant has acted dishonestly in relation to the primary claim and/or a related claim … and that he has thus substantially affected the presentation of his case, either in respects of liability or quantum, in a way which potentially adversely affected the Defendant in a significant way, judged in the context of the particular facts and circumstances of the litigation."

The fact that the greater part of the claim may have been genuine is irrelevant where the court makes a finding of fundamental dishonesty. The entire claim must be dismissed, unless the claimant would suffer substantial injustice.

In Howlett v Davies and Ageas Insurance from late 2017 it was held that a defendant did not have to specifically plead fundamental dishonesty in order for such a finding to be made if the facts dictated that.

What to look out for in 2019

The Civil Liability Bill will be law and will likely lead to a change in the discount rate being implemented before the end of 2019.

In February 2017, the Lord Chancellor amended the discount rate from 2.5% (the level at which it had stood since 2001) to minus 0.75%. While a review of the rate had been a long time coming, such a drastic alteration had not been expected. The reaction to the change led to a review of the entire rate-setting system by the Government and part two of the Civil Liability Bill sets out the methodology by which the future rate will be set.

The bill requires that the rate be reviewed by the Lord Chancellor at least every three years, with his or her determination being given within a 180-day review period. In determining the rate, the Lord Chancellor must consult an expert panel of four and the Government Actuary. The first review of the current rate shall begin within 90 days of the bill being enacted and must be completed within a further 180 days.

Experts expect the new rate to be set at between 0 and 1%.

Part one of the bill introduces reform of the claims process for those suffering whiplash injuries lasting less than two years as a result of a road traffic accident, with the introduction of a tariff of compensation with figures to be set by the Lord Chancellor. There will also be a ban on seeking or offering to settle whiplash claims without medical evidence. Secondary legislation is set to increase the small claims limit for road traffic accident claims to £5,000.

Authored by Robert John.

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