Compensation Act 2006

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Compensation Act 2006 [1]
Royal Coat of Arms of the United Kingdom (Variant 1, 2022).svg
Parliament of the United Kingdom
Long title An Act to specify certain factors that may be taken into account by a court determining a claim in negligence or breach of statutory duty; to make provision about damages for mesothelioma; and to make provision for the regulation of claims management services.
Citation 2006 c 29
Introduced by Baroness Ashton Department of Constitutional Affairs, 2 November 2005
Territorial extent  England and Wales, but sections 3 and 16(3) to (6) also extend to Scotland and Northern Ireland. [2]
Dates
Royal assent 26 July 2006
Commencement from 26 July 2006, s.3 retrospective
Repealed—
Other legislation
Amended by—
Repealed by —
Relates to—
Status: Current legislation
History of passage through Parliament
Text of statute as originally enacted
Revised text of statute as amended

The Compensation Act 2006 (c 29) is an Act of the Parliament of the United Kingdom, introduced in response to concerns about a growing compensation culture but conversely to ensure that the public received dependable service from claims management companies. In introducing the Bill, Baroness Ashton said that it was intended "to tackle perceptions that can lead to a disproportionate fear of litigation and risk averse behaviour; to find ways to discourage and resist bad claims; and to improve the system for those with a valid claim for compensation." [3]

Contents

The Act brought in specific changes to the law of liability and damages in negligence and breach of statutory duty. It further introduced a scheme of regulation for claims management companies.

Liability

Section 1 of the Act makes statutory provision that, in determining whether the omission of certain steps amounts to a breach of duty, the court may consider whether such steps, had they been performed, would prevent some desirable activity. For example, the court must consider whether precautionary and defensive measures might prevent something socially useful. Though this principle had often been observed by the common law, the Act places it on a statutory footing. [4] [5] [6] [7]

Section 2 stipulates that, in the event of an accident, an apology or offer or redress, such as paying for medical treatment, is not, of itself an admission of liability.

Sections 1 and 2 came into force on royal assent on 25 July 2006 (s.16(1)).

Damages

Asbestos fibres - a single fibre is believed to cause mesothelioma Anthophyllite asbestos SEM.jpg
Asbestos fibres - a single fibre is believed to cause mesothelioma

Section 3 reverses the common law rule on allocation of damages in various mesothelioma claims arising from unlawful exposure to asbestos.

In 2002, the House of Lords ruled in Fairchild v Glenhaven Funeral Services Ltd [8] that, where several parties had unlawfully exposed the claimant to asbestos and risk of pleural and peritoneal mesothelioma, all were liable for his injury, even though the claimant could not prove which individual party had provided the asbestos fibers that cause the disease. However, in Barker v Corus (UK) plc [9] the House of Lords took Fairchild further and held that the parties who contributed to the risk were severally but not jointly liable. This meant that any single tortfeasor was liable to compensate the loss that the claimant suffered from mesothelioma only to the extent that that tortfeasor was itself responsible for the increase in risk. E.g. if the tortfeasor that the claimant chose to sue was found to have only contributed 20% of the total increase in risk, then the claimant was awarded damages at 20% of the total loss that he is reckoned to have suffered as a result of the mesothelioma. This meant that if the claimant wanted to be compensated for his full loss, he had to separately sue all tortfeasors.

Section 3 effectively reversed the House of Lords decision in Barker by making all tortfeasors jointly and severally liable for the mesothelioma so that a claimant can recover compensatory damages for their full loss from any individual tortfeasor that materially increased the risk of mesothelioma. If a claimant does so, then the sued tortfeasor has the right to claim a contribution from any and all other tortfeasors that also materially increased that risk, proportionate to the extent by which each tortfeasor increased that risk.

To illustrate, if X gets mesothelioma from exposure at work, and he has worked for companies A Ltd., B Ltd., and C Ltd., each of which materially increased the risk of mesothelioma occurring in him, then X can choose any of the companies to sue. Suppose X sues C Ltd., then the court will award to X, and order C Ltd. to pay, damages totalling compensation for all of the loss he has suffered due to mesothelioma (i.e. 100%). Thereafter, C Ltd. can bring proceedings against A Ltd. and B Ltd., demanding from each a payment of a proportion of the total damages C was ordered to pay to X, corresponding to the proportion by which each company increased the risk of mesothelioma of the total increase in risk in X.

Further, section 3 is "treated as having always had effect" (s.16(3)) and also extends to Scotland and Northern Ireland (s.17).

Claims management companies

Part 2 of the Act seeks to regulate the provision of claims management services. As of 23 April 2007, an individual or a corporation may not provide claims management services by way of business unless authorised, exempt or otherwise in receipt of a waiver (s.4(1)). [10] The Act creates a Claims Management Services Regulator to authorise and regulate claims management companies and to (s.5):

It is a crime for an unauthorised person to provide or offer claims management services, or to pretend to be authorised. Offenders are punishable, on summary conviction, by a fine of up to level 5 on the standard scale or 51 weeks' imprisonment. If convicted on indictment in the Crown Court, offenders can be sentenced to an unlimited fine or two years' imprisonment (ss.7 and 11). Where a corporate crime is committed, the offender can only be fined and not imprisoned. The Regulator may investigate unauthorised trading and seek an injunction to prevent it or bring a criminal prosecution (s.8). It is a crime to obstruct the Regulator, punishable on summary conviction by a fine of up to level 5 on the standard scale (s.10).

Section 12 creates a Claims Management Services Tribunal to which a person may appeal a decision of the Regulator about authorisation (s.13(1)). There is a further route of appeal to the Court of Appeal (s.13(4)). The Regulator may also refer complaints or questions about the professional conduct of a claims management company to the Tribunal (s.13(2)).

Part 2 came progressively into force from 1 December 2006. As of March 2008, only section 13(2) (referrals to the Tribunal by the Regulator) remains to be brought into force. [10]

Section 16 - Commencement

The following orders have been made under this section:

Related Research Articles

At common law, damages are a remedy in the form of a monetary award to be paid to a claimant as compensation for loss or injury. To warrant the award, the claimant must show that a breach of duty has caused foreseeable loss. To be recognized at law, the loss must involve damage to property, or mental or physical injury; pure economic loss is rarely recognized for the award of damages.

Negligence is a failure to exercise appropriate care expected to be exercised in similar circumstances.

A tort is a civil wrong that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act. Tort law can be contrasted with criminal law, which deals with criminal wrongs that are punishable by the state. While criminal law aims to punish individuals who commit crimes, tort law aims to compensate individuals who suffer harm as a result of the actions of others. Some wrongful acts, such as assault and battery, can result in both a civil lawsuit and a criminal prosecution in countries where the civil and criminal legal systems are separate. Tort law may also be contrasted with contract law, which provides civil remedies after breach of a duty that arises from a contract. Obligations in both tort and criminal law are more fundamental and are imposed regardless of whether the parties have a contract.

In English civil litigation, costs are the lawyers' fees and disbursements of the parties.

The mineral asbestos is subject to a wide range of laws and regulations that relate to its production and use, including mining, manufacturing, use and disposal. Injuries attributed to asbestos have resulted in both workers' compensation claims and injury litigation. Health problems attributed to asbestos include asbestosis, mesothelioma, lung cancer, and diffuse pleural thickening.

<span class="mw-page-title-main">English tort law</span> Branch of English law concerning civil wrongs

English tort law concerns the compensation for harm to people's rights to health and safety, a clean environment, property, their economic interests, or their reputations. A "tort" is a wrong in civil law, rather than criminal law, that usually requires a payment of money to make up for damage that is caused. Alongside contracts and unjust enrichment, tort law is usually seen as forming one of the three main pillars of the law of obligations.

<span class="mw-page-title-main">Misrepresentation</span> Untrue statement in contract negotiations

In common law jurisdictions, a misrepresentation is a false or misleading statement of fact made during negotiations by one party to another, the statement then inducing that other party to enter into a contract. The misled party may normally rescind the contract, and sometimes may be awarded damages as well.

Causation in English law concerns the legal tests of remoteness, causation and foreseeability in the tort of negligence. It is also relevant for English criminal law and English contract law.

Breaking the chain refers in English law to the idea that causal connections are deemed to finish. Even if the defendant can be shown to have acted negligently, there will be no liability if some new intervening act breaks the chain of causation between that negligence and the loss or damage sustained by the claimant.

McGhee v National Coal Board [1972] UKHL 7, 1 W.L.R. 1, is a leading tort case decided by the House of Lords. The Lords held that where a breach of duty has a material effect on the likelihood of injury then the subsequent injury will be said to have been caused by the breach. This approach was taken to resolve injustice arising from the orthodox 'but for' test for factual causation. Otherwise, under the 'but for' test, multiple potential causes of harm would hold equal causal weighting, making it impossible to establish a greater than 50% probability of one cause.

<span class="mw-page-title-main">Tort reform</span> Legal reforms aimed at reducing tort litigation

Tort reform consists of changes in the civil justice system in common law countries that aim to reduce the ability of plaintiffs to bring tort litigation or to reduce damages they can receive. Such changes are generally justified under the grounds that litigation is an inefficient means to compensate plaintiffs; that tort law permits frivolous or otherwise undesirable litigation to crowd the court system; or that the fear of litigation can serve to curtail innovation, raise the cost of consumer goods or insurance premiums for suppliers of services, and increase legal costs for businesses. Tort reform has primarily been prominent in common law jurisdictions, where criticism of judge-made rules regarding tort actions manifests in calls for statutory reform by the legislature.

The tort of deceit is a type of legal injury that occurs when a person intentionally and knowingly deceives another person into an action that damages them. Specifically, deceit requires that the tortfeasor

<i>Fairchild v Glenhaven Funeral Services Ltd</i> 2002 English tort law case

Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22 is a leading case on causation in English tort law. It concerned malignant mesothelioma, a deadly disease caused by breathing asbestos fibres. The House of Lords approved the test of "materially increasing risk" of harm, as a deviation in some circumstances from the ordinary "balance of probabilities" test under the "but for" standard.

Wilsher v Essex Area Health Authority [1988] AC 1074 is an English tort law case concerning the "material increase of risk" test for causation.

<i>Barker v Corus (UK) plc</i> House of Lords decision

Barker v Corus (UK) plc [2006] UKHL 20 is a notable House of Lords decision in the area of industrial liability in English tort law, which deals with the area of causation. In this case, the House of Lords reconsidered its ruling in the earlier landmark case Fairchild v Glenhaven Funeral Services Ltd concerning the liability of multiple tortfeasors.

In England and Wales, a claims management company is a business that offers claims management services to the public. Claims management services consist of advice or services in respect of claims for compensation, restitution, repayment or any other remedy for loss or damage, or in respect of some other obligation. Claims management services cover litigation, or claims under regulation schemes or voluntary arrangements.

<span class="mw-page-title-main">Armley asbestos disaster</span>

The Armley asbestos disaster is an ongoing health issue originating in Armley, a suburb of Leeds, West Yorkshire, England. Described by Dr. Geoffrey Tweedale as a "social disaster", it involved the contamination with asbestos dust of an area consisting of around 1,000 houses in the Armley Lodge area of the city.

<i>Bailey v Ministry of Defence</i> English tort law case on factual causation

Bailey v Ministry of Defence [2008] EWCA Civ 883 is an English tort law case. It concerns the problematic question of factual causation, and the interplay of the "but for" test and its relaxation through a "material contribution" test.

A v Hoare, [2008] UKHL 6, is a leading tort case in British law, decided by the House of Lords in 2008.

In Newport News, Virginia, asbestos litigation is driven by the presence of Newport News Shipbuilding and other defense contractors. Asbestos was widely used in the shipbuilding industry.

References

  1. ↑ The citation of this Act by this short title is authorised by section 18 of this Act.
  2. ↑ The Compensation Act 2006, section 17
  3. ↑ Baroness Ashton (2005). "Written ministerial statement - House of Lords" (PDF). Department of Constitutional Affairs. Retrieved 20 March 2008.
  4. ↑ Daborn v Bath Tramways Motor Co Ltd & Trevor Smithey [1946] 2 All ER 333, CA, at 336
  5. ↑ Miller v Jackson [1977] QB 966, CA
  6. ↑ Bolton v.Stone [1951] AC 850, HL
  7. ↑ Lunney, M.; Oliphant, K. (2003). Tort Law: Text and Materials (2nd ed.). Oxford: Oxford University Press. pp. pp156–158. ISBN   0-19-926055-9.
  8. ↑ Fairchild v Glenhaven Funeral Services (2002) UKHL 22 see also wikipedia article
  9. ↑ Barker v Corus (UK) plc (2006) UKHL 20 see also wikipedia article
  10. 1 2 The Compensation Act 2006 (Commencement No. 3) Order 2007 (SI 2007/922)

Bibliography

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