Shifting the blame

There has been a rising tide of opinion that we were careering towards a strict liability regime. So that if, for example, an accident occurs on your property, you would have been found legally liable, no matter what precautions were taken.

Event organisers could have been forgiven for believing that their efforts to manage risks were pointless. They were given the overwhelming impression that however good their risk management, they would still be held legally responsible and that whatever efforts they make are in vain.

However, this perception was dealt a dizzying punch recently when the Court of Appeal found in favour of the organisers of a village maypole dance (Cole v Davis Gilbert).

A hole for the maypole had been excavated, and since no dance had taken place for some time it was filled in. The hole was then mysteriously dug out again and a woman crossing the village green tripped over it, broke her leg and claimed £150,000 in damages. The organisers were initially held responsible.

However, after a lengthy battle, the Court of Appeal found that the organisers had taken all reasonable precautions, including filling in the hole at the time of the original excavation, and that therefore they were not legally liable.

Of course accidents like this aren’t unusual. According to figures from the Department for Constitutional Affairs there were 755,000 claims for personal injury in 2004-05. However, this figure has levelled off since then indicating that claims numbers aren’t soaring out of control.

What is increasing however is the cost of claims. ABI figures show that the cost of personal injury claims in 2005 was £1.7bn – more than three times the £580m paid out in 2000.

It isn’t just the so-called compensation culture that has fuelled this increase. Ease of access to legal advice and more aggressive tactics used by claimant solicitors are key drivers. So too is the wider economic environment. Recessions inevitably result in a greater propensity for people to claim against employers or ex-employers.

So will this key case go some way towards stemming the flow of personal injury claims? In practical terms this is just one case among many other successful claims. It’s obviously a little too early to tell whether this will set a precedent for the future but it does perhaps set a benchmark.

What it does do is reinforce the reality that there is such a thing as an accident. Unfortunate events beyond our control do happen and the ruling acknowledges this. Sometimes, simply no one is to blame.

It should also give event organisers and society as a whole a boost of confidence. We don’t live in a strict liability regime; if anything we’re moving further away from it. As long as organisers of events take ‘reasonably practicable steps’, there’s a very good chance that they or their insurers will be able to defend claims against them.

So, firstly, risk management suddenly has teeth again, and furthermore the necessary balance between claimant and event organiser is redressed.

Reasonable precautions

This attitude is reflected in the Compens-ation Act (2006) which underlines how important it is to reasonably assess the likelihood of an accident occurring and take reasonable precautions to prevent something happening. It allows the courts to take into consideration whether certain steps to protect people are beyond what is reasonable and would prevent ‘desirable activities’ from taking place.

A country walk wouldn’t require the same level of risk management as a rock climbing expedition, for example. It’s all about weighing up the cost of doing something against the benefits and taking a proportionate approach to accident prevention.

In other words, if organisers have done everything practically possible to prevent an accident they will not be held legally responsible.

The court will make a judgment on the circumstances of the accident, the precautions taken and, crucially, whether taking further precautions would have actually prevented the activity taking place at all or severely curtailed its usefulness. A pretty commonsense attitude by the sounds of it.

There’s also another provision in the Compensation Act which is good news for those afraid of liability claims. The court will not treat an apology or offer of treatment as amounting to an admission of liability. If an accident happens, you can say sorry and it will not be tantamount to admitting it was your fault.

So what does this all mean for brokers and insurers? Most importantly it is a vital piece of evidence with which to reassure policyholders. You can underline the importance of risk assessment and health and safety and emphasise that they do make a difference. You can help them understand what they can do to help themselves, and their insurers in the event of a claim.

Event organisers should consider and document all risks and take reasonable steps to reduce them. They should make sure they have the right insurance cover in place in the first place too.

Insurers should be only too willing to provide cover for events if they are given enough time to assess the risks and offer risk management advice. It’s lack of preparation which worries insurers. If an accident happens in these circumstances, it’s just a case of the size of the cheque, defending the claim is rarely a possibility.

This case in particular reaffirms a commonsense attitude which has always been present, but is all too easy to lose sight of. With this case and others behind us, there is a good chance of quashing any drift towards a strict liability regime. IT

Lindsay Gray is a senior liability underwriter at Ecclesiastical Insurance