Injury claims under the Compensation Act 2006

The Compensation Act 2006 expands and clarifies personal injury law, including asbestos-related claims, and ensures that claims management companies are able to provide a fair service to those with a valid claim.

The Act is split into two parts. Part 1 contains provisions relating to negligence and breach of statutory duty. It also looks at liability in relation to mesothelioma. Part 2 provides the framework for the regulation of claims management services.

Understanding Part 1, Sections 1-3

The deterrent effect, negligence and breach of statutory duty

It was suggested by the Better Regulation Task Force (BRTF) in its report, Better Routes to Redress (May 2004) that there were a number of common misconceptions regarding the belief that a 'compensation culture' existed in the UK. The report indicated that there was little evidence to support the idea that such a 'culture' existed, however, the Task Force was concerned that these misconceptions could lead to ?a disproportionate fear of litigation and consequent risk-adverse behaviour'.

Section 1 of the 2006 Act addresses the reports concerns by clarifying the concept of ?reasonable care' in deciding negligence and breaches of statutory duty. The Act re-affirms the Courts power to deny liability for injuries not reasonably foreseeable or preventable.

In addition, Section 2 makes it clear that apologies and offers of treatment and other compensation do not amount to an admission of liability. By doing so, Defendants can offer financial support to an injured Claimant without admitting negligence.

Mesothelioma damages

Section 3 of the Act addresses the issue of liability in mesothelioma claims, making it easier for people suffering asbestos-related mesothelioma to receive full compensation for their injuries.

The Act states that where a person has been negligently exposed to asbestos, an employer is liable for the whole damage - regardless of whether the person affected had also been exposed by another employer or person. Each has both separate and joint responsibility.

This ruling was first set out in the case of Fairchild v Glenhaven Funeral Services Limited [2002], but subsequently reversed in the case of Barker v Corus UK plc [2006] which apportioned liability according to contribution to the disease making it difficult for Claimants to recover compensation. Section 3 of the Compensation Act reinstates the Fairchild principle.

Importantly, the principal does not prevent one employer or responsible person claiming a contribution from another or a finding of contributory negligence.

Understanding Part 2, Sections 4-15

Regulation of claims management companies

The regulatory objectives set out in the Act are:

  • Protecting and promoting the interests of consumers
  • Protecting and promoting the public interest
  • Improving standards of competence and conduct of authorised persons
  • Improving access to justice
  • Promoting practices to facilitate competition between different providers of regulated claims management services

Authorisation, penalties and appeals

Under Section 4 of the Act, a company or individual cannot provide claims management services for business unless authorised. In addition, Section 5 sets out the provision of a Claims Management Service Regulator to authorise and regulate the companies.

Sections 7-11 make it a criminal offence for an unauthorised company or person to offer claims management services or pretend to be authorised, setting out the penalties.

The Claims Management Tribunal was established under Section 12 so a person or company could appeal its authorisation decision. The Tribunals, Courts and Enforcement Act 2007 abolished the Claims Management Services Tribunal on 18 January 2010. Appeals are now made to the First-tier Tribunal (Claims Management Services).

Has the Act been successful?

In a post-legislative assessment of the Compensation Act 2006, the Ministry of Justice conclude that the Act was necessary and has achieved its legislative goals.

By continuing to ensure that Courts carefully consider negligence and liability and businesses comply with the conditions of authorisation and regulation, the assessment concluded that the Act helps to provide a better system for both Defendants and Claimants.