Lord Sumption, Justice of the Supreme Court, in delivering a speech to the Personal Injuries Bar Association, has described the process of attributing fault to a defendant in a personal injury claim as “inherently biased” towards claimants. Sumption questions whether it is right to impose liability in damages on the ground of negligence which he describes as “a normal feature of human behaviour”.
Sumption’s critical commentary, delivered on 16 November 2017, will come as music to defendants’ ears. His experience, which most defendants will share, is that courts are moving to strict liability without any acknowledgement of doing so.
Sumption describes judges becoming muddled in attributing fault. He accuses courts of “finding fault in arrears” with the benefit of hindsight - the outcome is made to look obvious, in that (according to the judge) it would have been obvious to the reasonable man, even if it wasn’t at all obvious to the defendant pre-accident. Whilst the injury may well have been avoidable, it does not follow that the act which caused it was negligent, but the current construction of such claims means “it is a major step in that direction”.
Statistics suggest that in 1973 around 250,000 claims a year were made; only 11% of victims even considered the possibility of bringing a claim, the main reason being that they did not realise they could. In 2013-14, around 1,200,000 claims were made. Clearly, there is now a wider knowledge of the availability of redress through the civil courts.
The cost of meeting personal injury claims is estimated at about 1% of the UK’s gross national product. 94% of such claims were brought against insured parties with most of the balance being brought against public bodies (perhaps because it is often not worth suing anybody else). Liabilities met by insurers or the state are passed through increased insurance premiums or taxes to cover the costs.
Why should compensation be dependent on fault when those at fault don’t pay?
Sumption’s wider social commentary queries why the victims of accidents, however caused, should recover a full indemnity as the law of tort presently requires, since society as a whole is paying for the injuries.
A fault-free system of first-party insurance would prevent special treatment being given to those victims who have had the “good fortune” (Sumption’s phrase) to suffer injuries which were someone else’s fault, whilst catastrophically injured claimants who cannot point the finger of blame go uncompensated. Additionally, a fault-free system will avoid the investigatory and legal costs of attributing blame. Most importantly, the current fault-based system tends to influence behaviour in an over-defensive manner, not always in the public interest.
Do fault-based systems have a negative effect on the provision of public services?
Sumption illustrates the latter point with the tragic birth deformities caused by Thalidomide. The only redress for UK-based victims was an action in negligence against Distillers Biochemicals, who merely marketed the active ingredient. Settlement was eventually reached, for around 40% of claimed damages, largely due to a press campaign which proposed that Distillers owed moral obligations beyond those imposed by the tort of negligence.
Subsequently, Bendectin was withdrawn from the US market, as a number of women who used the drug gave birth to physically deformed babies. The cost of defending class actions (none of which succeeded) made the drug unprofitable although there was no proof that Bendectin had caused any such defects. Pregnant women had to turn to less thoroughly tested drugs as an alternative, exposing them to greater risk.
The fear of liability in fault-based tort can therefore lead to the complete withdrawal of valuable resources, because attempts are rarely made to evaluate the risk against the unfavourable effects of eliminating it. “From the point of view of the rational Defendant, it is simpler, cheaper and safer to ban the relevant activity rather than embark on a complex and expensive case-by-case assessment”, says Sumption.
He disagrees that fault acts as a deterrent, stating there is a lack of consistent evidence of a deterrent effect. “Deterrence assumes there is reflection in the actor’s decision, but negligence usually includes the absence of the very reflection that deterrence assumes, with such occurring generally through ignorance, incompetence or oversight.”
The future of claims
Despite such criticisms, Sumption is in no doubt that the current system is here to stay. He suggests that the overall cost of meeting first-party non-fault liability claims would be astronomical. This is balanced against the fact that the costs presently to the whole population are “subtle, indirect and thinly spread”. Perhaps the most significant reason why the present system will survive is that it responds to widespread public notions about personal responsibility and the proper function of law. Sumption does not share these notions, but accepts he is likely to be in a minority.
Accordingly Sumption predicts fault will be used to control the cost of increasing premiums and pressures on the NHS budget. The outcome, according to Sumption, will be the abolition of the principle of full indemnity and a replacement by a statutory measure of damages, in two forms.
The first would be a value threshold on personal injury claims, with a view to eliminating small claims, which are “disproportionately costly and cumbersome to administer”. The second will be the capping or abolition of certain heads of loss. Sumption suggests abolishing damages for non-pecuniary losses, or at least limiting them to long-term pain and suffering and loss of amenity. Further, damages for loss of earnings could be limited to the amount necessary to support a reasonable standard of living (perhaps against the living wage), rather than the superior standard of living.
Lord Sumption’s speech will doubtless have given food for thought in the claimant PI sector. Some of his views, particularly in relation to limiting loss of earnings, are controversial.
The latter aspect is contrary to the basis of restitution, in that the victim should be put back into the position they were in prior to the act causing the loss. Not only would a highly remunerated claimant suffer a considerable loss should a standard rate of loss of earnings be introduced, but on the other hand, a claimant employed on a zero-hours contract on minimum wage could make a considerable profit, leading to legalised betterment.