Work disease victims given costs warning by Court of Appeal

Work disease claims for thousands of victims of industrial illness may be wiped out following a Court of Appeal judgment.

The decision may wipe out compensation claims for victims who have worked for more than one employer..

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Work disease Claims – Some background

Up until April 2013 a victim making a claim would get damages, costs and a solicitors success fee. In addition they got the expenses involved in the claim. If the Claimant lost they relied on insurance to pay the defendants costs. This insurance costs was recovered as well.

Following pressure from the insurance industry Lord Jackson changed the system. From then defendants no longer had to pay solicitor success fees, Claimants would get notionally higher damages and insurance costs would have to be borne by the victim out of their claim. To balance matters out if a claim failed then the Claimant would not have to meet the defendants costs. This is called Qualified One way Costs shifting (QWOCS).

The arguments about the system

The system has been the subject of a lot of discussion. Claimant’s are getting less compensation than before. They are having to pay for insurance which in modest value cases can be quite a deduction. However they are broadly free of any financial risk if the case fails.

Defendants often argue that QWOCS allows Claimant solicitors to run weak cases because they might tempt a risk offer from the defendant knowing they will not get their costs back in most cases.

At this point it should be pointed that some industrial diseases are dealt with as divisible cases. This means if someone worked for two employers for five years each and only one employer or insurer could be traced for a five year period then the Claimant – if he won his case – would get 5/10ths of his claim – or half. This percentage can be more or less than this depending on the time spent with each employer and the total period of exposure to noise or dust or fume.

Part 36 Offers

These are offers which either side can make which sets out a figure at which that party will settle. The other party then has 21 days to accept or reject it. If a greater result is achieved by the person making the offer then the offer can be brought to the courts attention. Then costs consequences can follow.

It is a commonly used tool by Solicitor to focus the other parties mind on a case.

Work Disease Clam – The Court of Appeal decision

The Court of Appeal has handed down its decision in Cartwright v Venduct Engineering & others 2018.

This decision is likely to have a big impact for cases for industrial disease such as deafness or asbestos disease. In particular it will affect those where the victim has worked for more than one employer.

In Cartwright the Claimant brought a case for deafness against six defendants.

He settled the claim against Defendants 4,5 and 6 by way of a process called a Tomlin order.  This was a global settlement of £20,000 to include his damages, costs, expenses and interest.

Eventually the claim was discontinued against the other defendants.  Because monies had been secured in the case the solicitor for those defendants tried to get their costs from what the Claimant had “won” already. They wanted to test the 2013 law and to see if they could get their monies back.

What did the Court of Appeal say?

The wording of the rules was assessed very carefully by the court. They balanced the 2013 changes in the law. They gave a clear ruling as follows.  If a scenario occurs where the Claimant secures compensation against some defendants but not others those remaining defendants can get at the proceeds of the successful part of the claim.

This means that a Claimant is never free of financial risk in the claim (unless he takes out insurance to cover this). Indeed  they may end up with less in damages or with damages wiped out entirely.

In this case because the settlement was set out in a Tomlin order (rather than a direct order of the court) the defendant could not recover  costs.

The second issue was whether the defendants can recover the costs of their appeal. It was accepted that this too could be recovered if monies were settled outside of a Tomlin Order or by a Part 36 offer.

The case also highlighted that the court is allowed to order that the Defendants cost be set off against the Claimant’s damages if so needed.

So what difference will this make?

Victims of industrial disease will now have to think very carefully about where they have been exposed to noise or dust or fumes with each past employer.  A very careful decision will need to be made whether proceedings are issued and served against all defendants.  This may mean in practical terms that they may lose a percentage of their damages if they choose not to pursue all the previus employers. Claimants will inevitably lose out. The risk is that if they then carry on and have to end a claim against others then what they have won could be wiped out.

So what can be done by you solicitor to protect you?

The judgment gives a clear warning about multiple defendant cases.

Industrial disease victims and solicitors will have to be much more alert to problems in cases with many defendant cases.

Here is our 6 point plan

1. At the very outset a firm decision will need to be made about making a claim against every possible defendant;
2. The work disease victim may have to concede some percentage of the claim at an early stage;
3. The case should only be the subject of court proceedings against those defendants the victim and his solicitor are really confident about;
4. Sensible Part 36 offers should be made to tempt defendants and to ensure monies are protected and;
5. Solicitors will need to consider more “bundled up” settlement including costs and damages and expenses in Tomlin Orders in the future and;
6. Insurance cover will need to be carefully sourced and put in place if there are concerns about the case at an early stage.