Judges limit damages rise

Depending on which newspaper headlines they have read, facilities managers with responsibility for health and safety in their particular workplaces may believe ‘huge’ damages payouts are in store for businesses found liable for the personal injury of one of their members of staff. Alternatively, they may believe that nothing very much has changed as a result of a ruling in the Court of Appeal five weeks ago. The truth lies somewhere in between.

The story begins just over a year ago when the Law Commission called for an increase in the portion of damages awarded for non-financial loss – in other words pain, suffering and loss of enjoyment of life – as a result of personal injury.

While damages for financial loss, for example loss of earnings and medical expenses, are capable of calculation, non-financial loss has always been a matter for the courts.

The Law Commission reviewed the awards process and concluded that this should remain the case, but argued that the current level of awards was too low. It recommended that awards for serious injuries – those typically above £3,000 – should be increased by between 50 per cent and 100 per cent so that the top of the scale would be at least £225,000, but not more than £300,000. Below this, awards should be increased by 50 per cent.

‘This would bring the scale into line with public opinion as to what is a fair level,’ said Professor Andrew Burrows, law commissioner for England and Wales at the time the commission published its report.

One year on, and the five appeal court judges who had the power to implement the recommendations of the commission have been subjected to the fury of campaigners and solicitors representing those bringing claims.

The fury follows the decision of those judges to limit the increase of the most serious awards to no more than a third above the existing maximum level. This tapers down to no increase at all for awards of £10,000 or less – the vast majority of cases.

Despite this watering down of the commission’s proposals, employers’ groups warn it remains a serious issue for those responsible for the management of health and safety in the workplace.

‘The judgment has pitched the increases at the middle range,’ says Graham Pike of the Confederation of British Industry’s environment, health and safety group, adding that the issue has been of considerable interest to member companies. But he warns: ‘It remains quite a serious issue. Clearly this is likely to have implications for the extent of likely personal injury claims against employers, and it means there will be even more of an incentive to effectively manage health and safety risks and ensure compliance in areas where civil claims have a basis.’

Others are interpreting the ruling more starkly: ‘The limits have been raised and the lid of Pandoras’ Box has been lifted,’ says Don Cuthbert, head of the international employee relations consultant Towers Perrin. ‘Since 1998 there has been an increase in personal litigation against corporations in the way that they manage their environment,’ he adds. ‘My prediction is that stress awards, for example, will be well in advance of £200,000 per case, including legal fees. I do not think employers have woken up to the fact that they can control this.’

Others meanwhile – not least the insurance industry – are breathing a sigh of relief that the full force of the Law Commission’s proposals were avoided. ‘Since the court ruled that there should only be increases in damages for the most severe cases, it is unlikely that we will see employers’ liability insurance premiums rise more than 1 or 2 per cent,’ says Suzanne Moore of the Association of British Insurers. ‘If the court had implemented the Law Commissions proposals in full we would have been looking at premium increases of about a third.’

But it looks as if the issue isn’t quite over. At least one of the solicitors representing the eight whose cases the Court of Appeal reviewed is considering appealing to the House of Lords.