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QBE Motor News Quarterly Spring 2009

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QBE Motor News Quarterly Spring 2009 Powered By Docstoc
					Motor news
quarterly update – spring 2009
Contents

Motor news
Quarterly – winter/spring 2009
News                                         1
track limits                                 1
new claims process                           1
Implementation                               2
qBe response                                 2
Health and safety (offences) act 2008        2
new charges for damaged vehicles
recovered by the police                      2
“rome II” – european union seeks
consistency in the selection of applicable
law in cross border disputes                 3

Costs                                        4
CFas, passengers, no risk, ate
premium unrecoverable                        4

Credit hire                                  5
offers of replacement vehicles,
failure to mitigate                          5
uninsured claimants; ex turpi causa          5

Fraud                                        7
tort of deceit, exemplary damages            7
fictitious accidents, credit hire,
non-party costs order                        7

Liability                                    9
Cars travelling in convoy,
apportionment of liability                   9
english claimants injured in
spain, applicable law                        9
As reported in our autumn bulletin,
the Ministry of Justice has published
the response to the consultation
process it carried out in 2007. Since
then organisations with an interest in
the new process for personal injury
*claims, have met with the MOJ to

clarify how the proposals would work
in practice.



News                                             •	 The	time	period	for	response	will	             •	 If	an	admission	is	made	because	the	
                                                    start the next working day after the              process makes a claim uneconomic to
the main points of the proposals and the            notification form has been sent.                  defend, the defendants will again have to
most recent developments are reported                                                                 word the admission very carefully so as
below:                                           •	 A	decision	on	liability	must	be	made	by	
                                                                                                      not to be prejudiced if the claim turns out
                                                    defendants within 15 working days. an
                                                                                                      to be worth more than was first realised.
Track limits                                        extension to 30 working days has been
                                                    agreed for the motor Insurers Bureau           •	 Where	liability	is	denied	or	contributory	
•	 The	MOJ	has	clarified	the	position	with	
                                                    (mIB) in recognition of the extra enquiries       negligence is alleged, the claim is dealt
   regards to the £10,000 maximum limit
                                                    that the bureau has to make. the                  with outside of the new process.
   for the process. the limit will not include
                                                    notification form will also have four extra
   claims for vehicle damage, hire etc but                                                         •	 Part	36	offers:	there	is	no	change	
                                                    questions for mIB cases.
   will apply exclusively to claims “arising                                                          however more emphasis is to be placed
   from the injury”.                             •	 The	MOJ	has	confirmed	that	all	of	the	            upon judicial discretion. If an unrealistic
                                                    questions on the notification form must           offer is made resulting in a quantum
New claims process                                  be fully completed for it to be valid.            hearing the party making the unrealistic
                                                                                                      offer should be penalised.
•	 A	“Claim	Notification	Form”	is	to	be	         •	 Once	liability	is	admitted	the	claimant	
   completed and served by the claimant’s           obtains medical evidence which is              •	 There	is	no	change	to	the	recoverability	
   solicitor within 5 days of gathering             served within 15 days of receipt. there           of after the event premiums. the
   “all required information” necessary             is however no set time or timetable,              proposal that premiums should only be
   to complete the notification form (as            for the claimant’s solicitor to obtain the        recoverable where liability is denied will
   opposed to 5 days from taking initial            medical report.                                   not be carried forward.
   instructions).
                                                 •	 An	admission	of	liability	is	to	be	binding,	
•	 The	MOJ	wishes	the	form	to	be	served	            save in cases of fraud.
   electronically and service will be deemed
                                                 •	 The	wording	of	liability	admissions	will	
   to have taken place unless the sender
                                                    need to be carefully chosen in order to
   receives an error message.
                                                    leave open arguments on causation.




*applicable to motor claims only
Implementation                                  Health and Safety (Offences)                       New charges for damaged
•	 The	Civil	Procedure	Rules	Committee	
                                                Act 2008: Tougher sentencing                       vehicles recovered by the
   is still considering draft rules, practice
                                                for breaches of health and                         police
   directions and pre-action protocols and
                                                safety legislation                                 the removal, storage and Disposal of
   the advisory Committee on Civil Costs        •	 The	Health and safety (offences) act 2008       Vehicles (Prescribed sums and Charges)
   is still to make recommendations on the         came	into	force	on	16	January	2009.	            regulations 2008 came into force on
   fixed recoverable costs regime.                                                                 1 october 2008. the regulations set out
                                                •	 The	Act	does	not	alter	existing	health	
                                                                                                   standard charges for recovery based on
•	 When	the	MOJ	hosted	a	meeting	of	               and safety duties but increases the
                                                                                                   vehicle size, position and damage and
   interested parties in november 2008,            number of offences for which individuals
                                                                                                   whether carrying a load or not.
   they told their guests that they intended       can be imprisoned.
   to implement the new rules by 1 october
                                                •	 Serious	breaches	of	the	Health	and	             Insurer associations, such as the
   2009. at the time of writing however,
                                                   safety at work act (1974) or supporting         lloyd’s market association and the aBI,
   this estimate has been put back to
                                                   regulation, obstruction of inspectors or        participated in the consultation process prior
   the first or possibly the second quarter
                                                   breach of prohibition or other notices          to the implementation of the regulations
   of 2010.
                                                   may be punished with custodial                  and were pleased to see many of their
                                                   sentences of up to two years.                   recommendations implemented. Concern
QBE response
                                                                                                   has been raised however, about the
                                                •	 The	maximum	fine	which	can	be	
there is much speculation that the reforms                                                         definition of the term “seriously damaged”.
                                                   imposed by magistrate’s Courts is
will not be implemented, mainly due to the                                                         this has been defined in the regulations as
                                                   increased from £5,000 to £20,000.
difficulties faced in creating an effective                                                        applying to a vehicle if “in the reasonable
costs regime. It would however be very          •	 Crown	Courts	retain	the	power	to	               opinion of a police constable it cannot
unwise to assume that they will fail and thus      impose unlimited fines but for many             be driven safely on the road”. this would
be caught unprepared for implementation.           offences a two year custodial sentence          mean that a vehicle with only minor
qBe is working to streamline the claims            is the new maximum penalty.                     physical damage, such as a flat tyre or a
process from first reporting to settlement                                                         broken brake light, could be classified as
                                                •	 The	new	penalties	are	not	retrospective	
so	that	the	deadlines	in	the	MOJ’s	new	                                                            “substantially damaged” because it could
                                                   and will not apply to offences committed
process can be complied with.                                                                      not be driven safely even though it would
                                                   before	16	January	2009.
                                                                                                   not be difficult to recover.
we are also reminding our policyholders         Comment: the new penalties apply to
that prompt reporting of accidents,             everyone with a responsibility for health and      the “substantially damaged” definition
irrespective of the new claims process,         safety in the workplace including individual       would for example, mean that the recovery
has proven to be an effective means of          employees. The prosecution of employees            charges for a laden vehicle of over 18
controlling the escalation of the cost of       has however, historically been rare and it         tonnes, upright on the road, would rise
claims.                                         is the directors, managers and partners of         from £350 to £4,500. representations
                                                businesses who are far more likely to be           have been made to the government on this
                                                at risk of a custodial sentence. It will not       issue. the government has indicated that
                                                be necessary for the prosecution to show           it will seriously consider concerns raised
                                                criminal intent in order to secure a conviction.   by insurers during the course of the first
                                                Both the government and the HSE have               operational year of the regulations.
                                                stated however that they see custodial
                                                sentences as being appropriate only where          Comment: vehicle owners can avoid
                                                fatalities or serious injuries have resulted       expensive police recovery charges by
                                                from the breach of health and safety law.          pre-arranging private recovery facilities.
                                                                                                   QBE policyholders can make use of the
                                                to see the full act go to www.opsi.gov.uk/         services of Auto–Rescue Logistics Ltd.
                                                acts/acts2008/ukpga_20080020_en_1                  Contact no: 0800 0285890.



2
motor news quarterly update – spring 2009
                                                                                                 In england and wales the quantification
                                                                                                 of damages is deemed to be a procedural
                                                                                                 matter whereas article 15 of the new
                                                                                                 regulation states that this process is
                                                                                                 substantive law. If quantification of
                                                                                                 damages is held to fall within the regulation,
                                                                                                 this could see the end of “forum shopping”
                                                                                                 in uK courts.

                                                                                                 article 14 of the regulation allows the
                                                                                                 parties to a dispute to make an agreement
                                                                                                 on the selection of the applicable law. such
                                                                                                 an agreement would have the benefit of
                                                                                                 avoiding the uncertainties of a contested
                                                                                                 hearing on jurisdiction.

                                                                                                 Comment: the European Union has
                                                                                                 sought to bring certainty to cross border
                                                                                                 disputes but there is likely to be much
                                                                                                 satellite litigation, at least in the short term,
                                                                                                 as to the new regulation’s interpretation
                                                                                                 and application. The provisions of the
                                                                                                 regulation are similar in part to the existing
                                                                                                 Private International Law (Misc Provisions)
“Rome II” – European Union                    however be displaced under the terms of            Act 1995 but the ultimate arbiter of cross
 seeks consistency in the                     articles 4(2) or 4(3) below.                       border disputes will now be the European
 selection of applicable law                                                                     Court of Justice rather than any national
 in cross border disputes                     under article 4(2), where both claimant            court and it is perhaps this that is the most
                                              and defendant “habitually” reside in the           significant feature of the new regime.
With	effect	from	11	January,	EU	regulation	   same country, it is that country’s law which
864/2007(known	as	“Rome	II”)	applies	         will apply regardless of where the damage
in all member states except Denmark.          occurred.
the regulation is retrospective and in
motor cases will apply to accidents           under article 4(3) the Courts will have
which occurred on or after 20.08.07. the      discretion to consider all the facts surrounding
regulation seeks to clarify the basis on      a case and to displace the general rule
which the applicable law is determined in     in favour of a more appropriate choice of
(non-contractual) cross-border disputes.      national law i.e. that of whichever country
                                              is most closely associated with the claim.
under article 4(1), the general rule is
that the applicable law will be that of the   article 1(3) designates the substantive law
country where the damage occurs rather        that governs claims but is not concerned
than the country where the event giving       with evidential and procedural issues. this
rise to the damage occurs. In road traffic    distinction may well lead to complications
accidents the country where the damage        as different member states define
occurs will inevitably be the same as where   procedural matters in different ways.
the accident took place. article 4(1) may
Costs                                        at a Detailed assessment Hearing the             The	District	Judge	agreed	that	the	ATE	
                                             claimant’s solicitors argued that the            premium had not been reasonably incurred
Conditional Fee Agreements,                  admission of liability was irrelevant and that   and disallowed it. He also reduced
passengers, no risk, ATE                     it was an accepted and reasonable practice       the medical report fee to £245 in line
premium unrecoverable: Aziz                  to take out an ate policy at the outset of       with association of medical reporting
v Liverpool Victoria Insurance               such a case to cover any liability for costs     organizations rates.
Ltd – Rawtenstall County                     incurred by the claimant. they also referred
Court (2008)                                 to the House of lords decision in Callery        Comment: an illustration that despite
the claimant was travelling as a passenger   and Gray (2002).                                 Callery and Gray ATE premiums may still
when he was injured in a road traffic                                                         be successfully challenged where there is
accident. liability for the accident was     the defendant’s solicitors countered that        no genuine risk of the claimant failing to
admitted immediately by the defendant’s      the court had wide discretion under the          recover costs.
insurers. Despite this admission, an after   Civil Procedure rules and supreme Court
the event insurance policy was taken out.    act 1981 to assess the reasonableness
the claim was settled without proceedings    of any ate premium and that it was for
and costs were paid on a predictive basis    the claimant to prove that it had been
but without the £350 ate premium and a       reasonably incurred. since the CPr had
disputed medical report fee of £495.         not been amended to remove the courts’
                                             discretion it followed that they were still
                                             free to exercise that discretion despite the
                                             judgement in Callery and Gray.




4
motor news quarterly update – spring 2009
Credit hire                                      Uninsured claimants; ex turpi                   although the credit hire claim had failed on

Offers of replacement                            causa: Smyly Agheampong v                       the illegality point, the case also addressed

vehicles, failure to mitigate:                   Allied Manufacturing (London)                   the issue of reasonable credit hire and

Copley v Lawn and Madden v                       Ltd – Central London County                     judgement on this issue was reserved, to

Haller – Leeds County Court                      Court (2008)                                    give the parties an opportunity to make
                                                                                                 further submissions.
(2008)                                           the claimant’s car was parked and
In both these cases the claimants had been       unattended when the defendant’s lorry           Comment: the judge commented that
offered free replacement vehicles by the         struck it, damaging it beyond economical        for the ex turpi defence to succeed the
third parties’ insurers KGm motor Policies,      repair. liability was admitted and the          defendants had to establish that (on the
following road traffic accidents. Both           defendants paid the claimant £1,505 in          balance of probability) the claimant would
claimants declined these offers.                 respect of the pre-accident value of the car.   have remained uninsured for the period of
                                                                                                 the hire claim but for the accident. They
In madden the claimant was offered a             the claimant however, also sought recovery      were undoubtedly assisted in this by the
replacement car before he entered into a         of 341 days credit hire charges in the sum      claimant having been uninsured for a very
credit hire agreement. at first instance, the    of	£34,076.68	and	the	defendants	refused	       long period pre-accident and by his being
whole claim for credit hire charges was          to pay these on two grounds.                    found to have tried to mislead the court. By
dismissed.                                                                                       implication, had the claimant been deemed
                                                 Firstly, they argued that the claim was         to have been only temporarily uninsured, the
In Copley the claimant had been offered a        tainted by illegality. the claimant had not     ex turpi defence would not have succeeded.
free replacement vehicle several days after      insured his car pre-accident and had been
she had signed the credit hire agreement. at     convicted for this offence. He would have
first instance only the hire charges up to the   continued to use it uninsured, for the period
time of KGm’s offer of a replacement car         of the loss of use claim, had the accident
were allowed.                                    not occurred. the claim must fail on the
                                                 basis of the public policy doctrine ex turpi
At	the	conjoined	appeal	HHJ	Langan	QC	           causa non oritur actio (there can be no right
was asked to consider two issues: firstly        of action founded on an illegal act).
whether the claimants had failed to mitigate
their losses and secondly whether they           secondly, the amount of credit hire charges
were entitled at least to the cost to KGm of     was unreasonable, being hugely in excess
supplying alternative cars. the claimants lost   of the value of the damaged car.
on both points.
                                                 the judge found that “upon a high balance
Comment: this is more good news for              of probability” the claimant had had no
defendants and their insurers. As in the         insurance	for	about	16	months	before	the	
case of Steadman v TNT (reported in              accident and that but for the accident he
the autumn 2008 bulletin) the offer of a         would have continued to drive uninsured.
replacement vehicle to claimants has proven      the doctrine of ex turpi causa applied and
to be a successful method of preventing or       the claim for credit hire must fail.
reducing credit hire charges.
6
motor news quarterly update – spring 2009
Fraud
Tort of deceit, exemplary
damages: Axa v Jensen –
Birmingham County Court
(2008)
the defendant sold her car through a car
dealer but did not receive any money from
the sale due to the company becoming
insolvent. she decided to fabricate a theft
claim to recoup her losses which her
insurers duly settled. when the police later
located the car in the possession of the new
owner, the defendant admitted that
the claim had been fabricated.

the police cautioned the defendant but
took no further action. the insurers brought
an action for the recovery of their losses,
exemplary damages and costs. the
defendant was ordered to repay the £8,100
settlement she had received with interest,
plus exemplary damages of £4,000 and
costs of £7,500.
                                               Fictitious accidents, credit                     the ate insurers declined to pay the
Comment: awards of exemplary damages           hire, non-party costs                            defendant’s costs on the basis of the
are unusual in insurance fraud cases.          order: Farrell and Short v                       claimants’ fraud. the defendant’s solicitors
Fraudulent claims have a direct impact on      Birmingham City Council -                        applied for a cost order against the credit
motor premiums and any new measures to         Birmingham County Court                          hire company Dams on the grounds that
discourage fraudsters should be welcomed       (2008)                                           the largest element of the claim was the hire
by both policyholders and insurers.                                                             charges and that Dams was the instigator
                                               the claimants alleged that their vehicle had     and potential beneficiary of the action. after
                                               been struck by one of the defendant’s dust       a contested hearing the judge ordered
                                               carts. they made use of a credit hire car        Dams to pay 80% of the defendant’s costs.
                                               supplied by Direct accident management
                                               services who referred the case to solicitors     Comment: even where there is no
                                               to recover the hire charges, the pre-            suggestion of complicity in a fraudulent
                                               accident value of the first claimant’s car and   claim, a non-party which instigates and/
                                               damages for personal injury on behalf of         or manages and stands to benefit from the
                                               both claimants.                                  litigation may find itself held liable for the
                                                                                                defendant’s costs.
                                               the defendant quickly settled the vehicle
                                               damage claim but declined to pay the
                                               other items of the claim after information
                                               was received suggesting fraud. the claim
                                               was eventually discontinued in the face of
                                               detailed fraud allegations and a costs order
                                               was made against the claimants.
Liability                                       English claimants injured in                     In deciding that english law should apply to

Cars travelling in convoy,                      Spain, applicable law: Mrs                       the damages claim, the judge held that the

apportionment of liability:                     Lauren B, Tyler B and Noah B                     factors linking the claim to england were

Hames v Ferguson and                            v Mr Mark B – High Court (2008)                  more relevant than those linking it to spain.
                                                                                                 the accident had occurred in spain and
Ors – Court of Appeal (2008)                    the defendant was driving a hire car in          the claimants had suffered their immediate
                                                spain on holiday when he mistook the road        losses there but all the parties were
two cars were travelling in convoy, at
                                                he was on for a dual carriageway and had         english and normally resident there and
speed, along a country lane. the claimant
                                                a head on collision with a spanish motorist.     the consequences of the accident would
was a rear seat passenger in the lead
                                                His wife and two children who were in the        be suffered, particularly by the second
car driven by the first defendant. the first
                                                car with him were injured and brought            claimant, in england long after any losses
defendant’s car struck a tractor towing a
                                                claims against him.                              in spain.
trailer which was turning into a field. the
claimant suffered severe head injuries.
                                                the second claimant, the defendant’s             Comment: in line with other recent decisions
the second car struck the trailer towed by
                                                son suffered serious spinal injuries leaving     on this issue, such as Harding v Wealands,
the tractor but caused no further injury to
                                                him doubly incontinent and likely to be          the country in which a catastrophically
the claimant. at first instance liability was
                                                wheelchair dependent in later life.              injured claimant will receive care appears
apportioned	on	a	60/40	basis	between	the	
first and second defendants respectively,                                                        to have been a major factor in the minds of
                                                as a preliminary issue the court had to
on the basis that the drivers of the two cars                                                    the court in deciding which country’s laws
                                                decide whether english or spanish should
had distracted one another. the second                                                           should be used to calculate damages.
                                                apply to the claims for damages.
defendant appealed.
                                                                                                 Further information
                                                the general rule, under the Private
the Court of appeal upheld the decision                                                          If you would like to discuss how any of
                                                International law (misc Provisions) act
of the first instance judge. He had properly                                                     the reported judgments or statutory
                                                1995, is that the applicable law should
explored the evidence and this supported                                                         changes could affect your business,
                                                be that of the country in which the tort
his view that the drivers of the two speeding                                                    please speak to your qBe contact or
                                                occurred. In deciding whether this should
cars had distracted one another. appeal                                                          specialist technical advisor. Details or
                                                be displaced (as permitted under the act)
dismissed.                                                                                       copies of featured judgments, statutes
                                                the judge adopted the three part approach
                                                set out by the Court of appeal in roerig         and regulations can be obtained from
Comment: it is common to see liability for                                                       John	Tutton	(contact	no:	01245	272756,	
                                                v Valiant trawlers ltd (2002). the first
an accident split between vehicles which are                                                     e-mail: john.tutton@uk.qbe.com).
                                                part was to identify the issue on which
racing but the Court of Appeal now appears
                                                the general rule should be displaced, the
to have extended this approach to cars
                                                second was to identify the factors linking the
travelling in convoy.
                                                case with each of the two countries and the
                                                third was to weigh the significance of the
                                                various factors. the judge also bore in mind
                                                that “forum shopping” was an increasing
                                                and unwelcome trend that should be
                                                discouraged.




8
motor news quarterly update – spring 2009
Disclaimer                                       qIel and the qBe Group have no
                                                 obligation to update this report or any
this publication has been produced by            information contained within it.
qBe Insurance (europe) ltd (“qIel”).
qIel is a company member of the qBe              to the fullest extent permitted by law,
Insurance Group.                                 qIel and the qBe Group disclaim any
                                                 responsibility or liability for any loss or
readership of this publication does not          damage suffered or cost incurred by you
create an insurer-client, or other business      or by any other person arising out of or in
or legal relationship.                           connection with you or any other person’s
                                                 reliance on this publication or on the
this publication provides information about
                                                 information contained within it and for any
the law to help you to understand and
                                                 omissions or inaccuracies.
manage risk within your organisation. legal
information is not the same as legal advice.
this publication does not purport to provide
a definitive statement of the law and is not
intended to replace, nor may it be relied
upon as a substitute for, specific legal or
other professional advice.

qIel has acted in good faith to provide an
accurate publication. However, qIel and
the qBe Group do not make any warranties
or representations of any kind about the
contents of this publication, the accuracy or
timeliness of its contents, or the information
or explanations given. qIel and the qBe
Group do not have any duty to you, whether
in contract, tort, under statute or otherwise
with respect to or in connection with this
publication or the information contained
within it.
                                                                                                                                        QBE European Operations
                                                                                                                                                                         one Coval wells
                                                                                                                                                                             Chelmsford
                                                                                                                                                                                  essex
                                                                                                                                                                              Cm1 1wZ
                                                                                                                                                               tel +44 (0)1245 272 700
                                                                                                                                                              fax +44 (0)1245 272 701
                                                                                                                                                              motor@uk.qbe.com
                                                                                                                                                        www.qBeeurope.com/motor




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